Yes. IHSS (In-Home Supportive Services) income can be used to qualify for a mortgage. Both FHA and conventional loan guidelines accept IHSS income with proper documentation. Because most IHSS payments are non-taxable under IRS Notice 2014-7, lenders can gross up the income by 25%, which actually increases your qualifying power compared to a taxable income of the same amount.
Why Most Lenders Get This Wrong
Many loan officers see 'IHSS' on a bank statement and immediately say it can't be used because it doesn't appear on tax returns. That's incorrect. IRS Notice 2014-7 specifically classified IHSS payments as difficulty-of-care payments excluded from gross income, meaning the income is real, it's just non-taxable. Fannie Mae and FHA both have guidelines that explicitly allow non-taxable income to be grossed up for qualifying purposes.
How IHSS Income Is Documented
To use IHSS income for a mortgage, you'll typically need: a current IHSS Notice of Action (your award letter showing the approved hours and pay rate), 12-24 months of bank statements showing consistent deposits, and evidence the income is expected to continue. The award letter establishes continuance, as long as the recipient still qualifies for IHSS services, the income is considered stable.
How the 25% Gross-Up Works
If you receive $2,000 per month in non-taxable IHSS income, lenders can use $2,500 per month ($2,000 x 1.25) to calculate your qualifying income. This is a meaningful difference in how much home you qualify for. Not all lenders apply this correctly, some use the net figure and others don't apply the gross-up at all, which understates your income and may cause unnecessary denials.
IHSS and FHA Loans
FHA is often the most accessible path for IHSS borrowers due to its lower credit score thresholds and down payment requirements. FHA guidelines allow non-taxable income gross-ups and are generally familiar with IHSS. The key is working with a lender who has actually processed IHSS files before, not one who's treating it as an unusual edge case.
IHSS income is one of the most commonly mishandled income types in the mortgage industry. I've seen borrowers told they can't qualify because their income 'doesn't show on tax returns', but that's exactly the point. Non-taxable income doesn't need to show on a return to count. If you receive IHSS payments and have been told you can't qualify, get a second opinion. In most cases, you can.
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