Using your dream job to buy your dream home
This is such an exciting time to be a pilot and in the airline industry! The pilot shortage that was delayed by COVID is now in full swing and only projected to grow over the next few years as mandatory retirements kick in and airlines work to regrow their networks. As a result, we are seeing amazing new contracts signed at many regional airlines and more to come at the majors along with a wave of new hires/upgrades in the industry. Finally, pilots at all stages in their careers are being compensated properly and have opportunities to advance. With increased pay and new positions may come the need to relocate or upgrade your home. In this article, I’m going to show you how you can reduce the stress of getting a mortgage if you’re either a new hire or simply got a pay bump due to a new contract or upgrade.
The biggest challenge for pilots with the mortgage industry is trying to get your loan officer, and more importantly your underwriter, to understand how you are paid. To us, as airline pilots and me as a pilot-friendly senior loan officer, it is very simple; treat us as salaried employees paid a minimum guarantee multiplied by your hourly pay rate. If you have two years or more of time with your airline then you can use your average monthly pay hours multiplied by your hourly pay rate. If you just went to second-year pay or upgraded to captain then it’s just a new hourly rate multiplied by your minimum guarantee or your 24-hour month average pay hours. Unfortunately, most people outside our industry have trouble understanding that and thus look at us as variable income employees which requires work history and averaging pay that will then reduce your qualifying income and thus, the cost of the home you can qualify to buy. To avoid problems, please make sure, early in the conversation with any lender, that they understand how to qualify you and that they also confirm it with their underwriters as well. Some loan officers are more experienced than others, but at the end of the day, it’s the underwriter you must get to sign off on the loan, not the loan officer. This is a conversation you want to have sooner rather than later. Over the years, I’ve taken calls from many pilots who were supposed to close the following week but the underwriter denied the loan at the last minute over pilot pay.
Now let’s talk about using future income of a new hire, pay increasing due to longevity, or pilots upgrading. In all these scenarios, airline documentation is key, and again, understanding by the underwriter is critical. Short story – you can use future income to qualify if it will begin within 60 days of closing and is unconditional. For a new hire, a conditional job offer letter won’t work, but a job offer letter after you’ve satisfied any pre-employment requirements (drug, PRIA, etc.) will, as long as it has your pay rate, minimum guarantee, and start date. I’ve closed multiple new hires at my own airlines before they’ve started class because my airline will provide the right documentation. For contractual pay raises due to longevity or upgrades, a letter with the effective date and new pay rates can be used to qualify. Realize, some airlines, due to their HR policies, will not provide anything more than a conditional job offer letter until you actually start class or document your longevity pay increase/upgrade pay rates until it’s reflected on your pay stubs.
As an airline pilot who writes more mortgages than hours I fly, I can tell you that what I’m explaining works, but it can be an uphill battle. While all these things seem common sense to us in our industry, most outsiders haven’t seen it enough to get it. Since my company and our underwriters see so many loans like these, they get it. But don’t expect the same everywhere, so please start early. There is no harm in having an honest conversation early with whatever lender you’re interested in working with, because if you don’t, you only risk additional stress/drama, or worse, not closing on your home once you are under contract. Most lenders these days can even do a pre-underwrite for you before you find a home so you can mitigate the risks I’ve discussed.
Remember, the only real way to ensure you’ll qualify and for how much is to reach out to a licensed loan officer sooner than later. Build that relationship early, have the tough conversations upfront, and don’t fall for the sales trick of over promising then under delivering. Interest rates, lender fees, and closing timelines are secondary conversations to have once you’ve firmly established your qualification. If the lender can’t understand your pay or scenario, then the deal is worthless.
Trident Home Loans and I are always here to help, whether it’s doing your loan or just offering advice. Feel free to contact me with any questions at email@example.com or on my cell phone at 850-377-1114. I’m always happy to help a fellow pilot navigate the mortgage process. Also, please check out my previous articles on pilot mortgages available in the October 2018 through February 2019 issues of Aero Crew News.