Can overtime income count for an FHA loan?

Yes, overtime income can be used for FHA qualification — but only if it has a 2-year history and is likely to continue. A letter from your employer confirming that overtime is available and not seasonal is helpful. FHA underwriters average the income over 24 months; a spike in overtime pay in the most recent year is not fully counted unless the history supports it.

Can bonus income qualify for an FHA loan after just 1 year?

Typically no. FHA guidelines require a 2-year history of bonus income to use it for qualifying. However, if your bonus is contractually guaranteed (part of your employment agreement), a lender may count it after 1 year with documentation. The income is averaged over the period it has been received.

Can trust income qualify for an FHA loan?

Yes, trust income can be used if it is ongoing, documented through the trust agreement, and the borrower can demonstrate 3 years of continued receipt. The lender will want a copy of the trust document and bank statements showing consistent deposits.

Can rental income offset debt on an FHA application?

If you own a rental property and receive rental income, FHA allows you to use 75% of the gross rent shown on your tax returns as qualifying income, which reduces your effective DTI. If you're converting your current primary residence into a rental to buy a new home with FHA, the rules are stricter — documentation of a lease and equity in the departing residence are required.

What is the FHA loan limit in Kern County for 2026?

The 2026 FHA loan limit for Kern County is $524,225 for a single-family home, $671,200 for a duplex, $811,275 for a triplex, and $1,008,300 for a 4-unit property. These limits cover the vast majority of active listings in the Bakersfield market.

Can I get an FHA loan if I was recently self-employed?

FHA requires 2 years of self-employment history to use self-employment income. If you transitioned from W-2 employment to self-employment in the same field within the last 2 years, a lender may use combined income — but the most recent 2-year tax returns are required. New self-employed borrowers with under 1 year of history typically cannot use that income for FHA qualification.

Can I buy a multi-unit property with an FHA loan as a first-time buyer?

Yes. FHA allows the purchase of 2–4 unit properties with 3.5% down as long as the borrower occupies one unit as their primary residence. This is one of the most underused strategies in the Bakersfield market — a duplex where you live in one unit and rent the other can dramatically reduce your net housing cost.

What Disqualifies a Property for an FHA Loan? (Full List for Buyers and Realtors)

FHA loans come with a set of property standards that the appraiser evaluates on behalf of HUD. These are called Minimum Property Requirements, MPRs, and they exist to ensure the home is safe, sound, and sanitary. If the appraiser flags issues, the loan is conditioned on repairs. If repairs can't be agreed on, the deal collapses. Knowing what FHA looks for before making an offer saves everyone time, money, and frustration.

Bakersfield has significant older housing stock. Homes built before 1978 are common in central and southwest parts of the city, which means lead-based paint concerns appear in FHA transactions here more often than in newer subdivisions. That alone makes this worth understanding before you write your next offer.

Structural and Foundation Issues

FHA appraisers look closely at structural integrity. Active foundation cracks, those showing movement, water intrusion, or visible separation, will be flagged. Settlement issues that affect habitability or structural soundness are a problem. A hairline crack that's been stable for decades may pass; a crack with active water seepage or visible displacement likely won't. Roof condition is also scrutinized: FHA requires that the roof have at least two to three years of remaining useful life. An appraiser who determines the roof is at end of life will call it out.

Safety Hazards

This is a broad category covering a wide range of conditions. Exposed or frayed electrical wiring, open junction boxes, and non-functional GFCI outlets near water are common FHA flags. Non-functional heating systems must be repaired, FHA requires adequate heat for the climate. Missing handrails on staircases with four or more steps will be flagged. Broken windows that create a safety or weatherization risk must be repaired. These aren't cosmetic concerns, they're safety-based minimum standards.

Water Damage and Drainage

Evidence of active water intrusion, significant visible mold, or standing water in a crawlspace will almost always trigger a repair condition. Drainage that slopes toward the foundation must be corrected. Plumbing that isn't functional at the time of appraisal, broken pipes, non-draining fixtures, must be operational. A property that previously failed FHA for water issues needs documentation that the underlying problem was fixed, not just the visible symptom.

Lead-Based Paint (Pre-1978 Homes)

For any home built before 1978, FHA requires that all peeling, chipping, or flaking paint be remediated. The appraiser doesn't test for lead, they look for deteriorating paint. If they see it, the condition must be repaired before the loan can close. Sellers of older Bakersfield homes should be proactive about repainting deteriorated surfaces before listing if they want to stay FHA-eligible.

Empty Swimming Pools

HUD considers an empty, unmaintained swimming pool a safety hazard. An appraiser flagging an empty pool will require that it be filled, properly maintained, or fenced to HUD specifications. If the pool is non-functional and can't be brought into compliance, it can be a deal-breaker for FHA financing. A filled, operational pool in good condition is not a problem.

Pest Damage

In California, FHA requires a termite and pest inspection in most transactions. Active infestation or structural damage from wood-boring insects needs to be treated and repaired before closing. Kern County has active termite activity, this is not hypothetical. Sellers should have a current pest clearance report available.

What Realtors Can Do Proactively

If you're a listing agent with a property that has deferred maintenance, peeling paint, aging roof, empty pool, questionable electrical, talk to your seller about targeted repairs before listing. An FHA-eligible property draws from a larger buyer pool. A property that fails FHA conditions mid-transaction often means renegotiating price or terms under pressure. A pre-listing repair strategy is almost always worth it.

When a Property Fails FHA Conditions

You have options. The seller completes the repairs before closing. The buyer negotiates a seller credit and uses an FHA repair escrow holdback to close before all repairs are done (allowed for minor items with lender approval). The buyer switches to a conventional loan if they qualify, conventional appraisals are less restrictive than FHA. For properties needing substantial work, an FHA 203(k) rehabilitation loan finances the purchase price plus renovation costs in a single loan.

Common Mistake

Realtors writing FHA offers on obvious fixer-uppers without understanding what the appraiser is going to flag. I've seen agents submit FHA contracts on homes with missing handrails, broken windows, exposed electrical, and peeling paint throughout, then act surprised when the appraisal comes back with six conditions. Read the property before you write the offer. If it has obvious issues, either prepare the seller to make repairs or structure the offer as conventional or cash from the start.

Bottom Line

FHA has specific opinions about property condition, and those opinions carry the weight of a required appraisal condition. Knowing the MPRs before making an offer protects everyone's time and keeps deals from collapsing for preventable reasons. When in doubt about a specific property, call me before the offer is written, not after the appraisal comes back.