Here's a conversation I have at least once a week:
A firefighter or cop calls me, tells me what they make, and then says something like: "I don't know if I'll qualify — my base pay isn't that high."
And I have to stop them right there.
Because base pay is usually the smallest part of the picture for first responders. The real income — the income that reflects how they actually get paid — includes overtime, shift differentials, specialty assignments, acting pay, hazmat pay, training incentives. That's not bonus money. That's how the job works.
The problem isn't the income. The problem is finding a lender who knows how to document it correctly.
Most lenders don't work with first responders regularly. That's just the reality. So when a firefighter hands them two years of W-2s and a paystub showing overtime, they don't know what they're looking at.
What happens next usually goes one of two ways:
They ignore the overtime entirely — or they use it aggressively to force a number that won't survive underwriting. Both approaches hurt the borrower.
Ignoring valid income is the most common mistake. The lender sees irregular numbers, doesn't know how to average them correctly, and just leaves them out. The buyer gets a pre-approval that's thousands of dollars lower than what they actually qualify for. They start shopping in the wrong price range. They lose offers they should have won.
The other mistake is overcounting. A lender wants to make the deal work, so they grab the highest overtime months and run with it. That approval looks great on paper until it hits underwriting — and then it falls apart. Now you've got a borrower who's 30 days into escrow getting bad news.
Neither of these is acceptable. And both of them are avoidable.
Here's how overtime income is supposed to be evaluated — and I'm going to say this plainly because most online explanations make it more complicated than it needs to be.
For overtime to count, underwriters want to see a documented history — typically two years of consistent overtime showing up on your W-2s and tax returns. Consistent doesn't mean identical every year. It means it's a pattern, not a one-time thing.
If you've been working overtime for years, that history is there. We document it. We average it. We use it.
Underwriters also want reasonable confidence that the income will continue. For first responders, this is almost never an issue. You're not a seasonal contractor. You're a career professional with a union contract, a pension, and mandatory staffing levels that guarantee shift coverage. That's exactly the kind of stability underwriters are looking for.
The underwriter doesn't need perfection. They need consistency. And first responders have consistency built into the job.
Once we've established the history and the likelihood to continue, we calculate a monthly average. Here's a simplified version of how that works:
• Add up your overtime income over the documented period
• Divide by the number of months in that period
• That monthly number gets added to your base pay for qualification purposes
The exact calculation varies slightly by loan type — VA, FHA, and conventional each have their own guidelines — but the core principle is the same. We're telling the story of how you actually get paid, not just what's on your base salary line.
Overtime is the most common piece, but it's not the only income source that matters. Depending on your department and assignment, you may also have:
• Shift differentials — extra pay for nights, weekends, or holidays
• Acting pay — when you're working above your rank temporarily
• Hazmat or specialty assignment pay
• Training or certification incentives
• Longevity pay or step increases
Most of these can be documented and used — if they show a consistent history. The key word is documented. We need to be able to show the underwriter where it comes from, what it's based on, and why it's likely to continue.
This is where experience matters. A lender who does this regularly knows exactly what documentation to ask for and how to present it. A lender who doesn't will either miss it or mishandle it.
I want to be clear about something: the goal here is accuracy, not aggression.
I'm not trying to inflate your income to squeeze you into a house you can't afford. I'm trying to make sure the number we're working with actually reflects what you earn. There's a big difference.
We're not stretching the file. We're telling the story correctly.
When I work with a first responder, here's what I'm looking at before we ever talk about a purchase price:
• Two years of W-2s from all employers
• Most recent paystubs — typically the last 30 days
• A written Verification of Employment if needed
• Any documentation from the department on specialty pay structure
From that, I can put together a clean, defensible income calculation that will hold up through underwriting. No surprises at day 30. No re-approvals. No deals falling apart because someone was aggressive with the numbers.
Clean approvals win in competitive markets. And Rancho Santa Margarita is a competitive market.
I want to put a number on this because it matters.
Let's say a firefighter is making $85,000 in base pay but averaging $28,000 a year in overtime over the last two years. That's $113,000 in total income.
A lender who ignores the overtime qualifies them on $85,000. In Orange County, that's a meaningful difference in purchasing power — potentially $100,000 to $150,000 in purchase price depending on the loan structure and their debt picture.
That's not a rounding error. That's the difference between buying in Rancho Santa Margarita and being told you need to look somewhere else.
This is why it matters who you work with. Not because every lender is incompetent — most of them are perfectly capable with a standard W-2 salaried borrower. But first responder income has nuance. And nuance requires experience.
If you're a first responder and you've been told your income "might be an issue" — get a second opinion before you believe it.
Overtime is not lottery money. Specialty pay is not a bonus. These are documented, consistent, earned income sources that belong in your qualification picture. The question is whether your lender knows how to put them there correctly.
I've been doing this for 25 years. I was a firefighter for 15 of them. I know how you get paid because I got paid the same way. And I know how to document it so underwriting doesn't have a single question.
For local guidance, work with a trusted first responders can afford to buy a home in Rancho Santa Margarita. who understands first responder income.
This is where working with a lender who understands first responder income structures matters.
