How Firefighters Can Use Their Side Hustles to Qualify for a Home Loan

A Firefighter wears many hats! From fighting fires to a side hustle carpenter, to a husband, baseball coach and soccer dad!

Firefighters in the Orange County Fire Authority (OCFA) and across the country are known for their dedication to public service. But what many people may not realize is that many firefighters have side jobs in construction, house painting, property flipping, or even car sales. These additional income streams can be a huge advantage when applying for a mortgage—but only if handled correctly.

Too often, self-employed individuals or those with side businesses deduct too many expenses on their taxes to reduce taxable income, which inadvertently hurts their ability to qualify for a home loan. Let’s explore smart strategies for firefighters who want to maximize their reported income and secure the best mortgage possible.

1. Why Side Hustle Income Matters for Mortgage Approval

Firefighters already have a steady W-2 salary, which is a great foundation for a mortgage. However, in high-cost areas like Orange County, that income alone may not qualify for the home they want. That’s where side hustle income comes in—it can push borrowing power higher.

However, lenders don’t just take your word for it. They typically require at least two years of tax returns showing consistent self-employment income before they count it towards mortgage approval. That means properly structuring and reporting side income well in advance of applying for a home loan is crucial.

2. The Two-Year Rule: Why You Need to File Taxes on Side Jobs

Many firefighters operate their side businesses informally getting paid in cash or through apps like Venmo. While this is common, it becomes an issue when applying for a mortgage because if the income isn’t reported on taxes, lenders won’t count it.

Pro Tip: Even if you had a lower-income year, file your taxes and report the income. This establishes a track record of earnings, which is what lenders want to see.

3. The Write-Off Dilemma: More Deductions = Lower Loan Approval

A big mistake many self-employed people make is writing off too many expenses to lower their tax bill. While this reduces the amount of taxes owed, it also lowers the net income that lenders see, making it harder to qualify for a mortgage.

Example: A firefighter earns $80,000 from OCFA and makes an additional $30,000 from a home painting business. If they write off $20,000 in expenses, their taxable income is now only $90,000 instead of $110,000. Lenders base mortgage approvals on net income, so the firefighter may qualify for a smaller loan than expected.

Solution: If buying a home soon, consider limiting deductions for one to two years to keep net income high enough to qualify for a better mortgage.

4. Consistency is Key: Avoiding Big Income Fluctuations

Lenders don’t just look at one year’s tax return—they average at least two years of self-employment income. That means if you show $50,000 one year and $10,000 the next, they may only count $30,000 per year toward your mortgage qualification.

Pro Tip: Keep side hustle earnings steady or increasing in the two years leading up to a mortgage application.

5. Structuring Your Side Hustle for Mortgage Success

There are different ways to structure a business—sole proprietorship, LLC, S-Corp, etc.—but for mortgage purposes, lenders usually count net income from Schedule C (if sole proprietor) or W-2 salary (if S-Corp).

Best Approach: If planning to buy a home, consider keeping it simple with a sole proprietorship or LLC that passes income directly to personal tax returns.

6. Keeping Bank Records Clean for Lender Verification

Lenders may ask for bank statements to verify side job income. If money is mixed between personal and business accounts, it can get messy.

Pro Tip: Use a separate business bank account for side hustle income. This makes it easier to show clear proof of earnings.

7. Work With a Tax Professional Who Understands Mortgage Lending

A good tax preparer can help you balance tax efficiency with mortgage qualification. The right strategy will ensure that you’re not overpaying in taxes while still showing enough income to qualify for the home loan you want.

Final Thoughts: Firefighters Can Win in Real Estate

With smart tax planning and financial structuring, firefighters with side jobs can significantly boost their mortgage eligibility. By properly reporting income, balancing deductions, and keeping a steady income history, OCFA firefighters and others can leverage their entrepreneurial spirit to achieve homeownership and long-term financial success.

Thinking about buying a home? Let’s talk strategy!

Gerald (Jerry) McMillan

the Humble Lender