Harris County

Pasadena Mortgage Broker: Overtime and Shift Income Home Loans

A great many Pasadena households earn substantially more than their base rate suggests. Overtime, shift differential, turnaround work and per diem can account for a third or more of annual pay in the plants along the ship channel.

Lenders will count most of that — but only under specific conditions, and only if it is documented the right way. Borrowers here are routinely approved for far less than they actually earn, because nobody structured the file to capture the variable half.

That is the conversation worth having before you shop.

How variable income actually gets counted

Base pay is simple: hourly rate times scheduled hours. Everything on top follows a different set of rules.

The general standard is a two-year average with a stable or rising trend. An underwriter looks at your W-2s for the past two years and your year-to-date pay stub, calculates an average monthly figure for each variable component, and uses it — provided the pattern supports it continuing.

Component by component:

Overtime. Generally usable with a two-year history, averaged. Some programs will consider a 12-month history where the employer confirms it is regular and expected to continue. The verification of employment matters here: a VOE that says overtime is "likely to continue" is doing real work in your file.

Shift differential. Treated as part of base pay when it is a fixed premium on a regular schedule, which is more favorable than overtime treatment. If you work a permanent night or swing rotation, make sure your pay stub and VOE show the differential as a consistent component rather than lumping it into miscellaneous earnings.

Bonus. Two-year average, same trend test.

Turnaround and shutdown pay. This is the Pasadena-specific one. Turnaround work is episodic by nature — heavy hours during a plant outage, ordinary hours between. Underwriters vary in how they treat it. What helps: a two-year history showing the pattern repeating, and an employer statement confirming it is a recurring feature of the role rather than a one-time event.

Per diem. Frequently not counted as qualifying income at all, because it is a reimbursement rather than compensation. Where it is counted, the associated expense generally offsets it. Do not build a purchase price around per diem.

The declining trend problem

This is what stops files, and it is worth stating plainly.

If this year's variable income is meaningfully below last year's, most underwriters will use the lower figure — and some will decline to use it at all until it stabilizes. An average is only defensible when the trend supports it.

Practical consequences:

• Buying in the year after a heavy turnaround season is materially easier than buying in the year after a light one
• A job change that reset your overtime pattern restarts the history, even at the same plant
• Moving from a contract role to a direct-hire role, or the reverse, can look like instability on paper even when it was a promotion

None of this is a reason not to buy. It is a reason to get the file reviewed before you are under contract, so the price range you shop is the one underwriting will actually support.

What to bring

• Two years of W-2s, and two years of returns if you have any 1099 or contract income
• Thirty days of pay stubs, ideally showing each component broken out separately
• The year-to-date totals, which is where the averaging is actually done
• Anything explaining an anomaly — a strike, a plant outage, an injury leave, a pay structure change

Flood, briefly, because it affects the same ratio

Pasadena sits on flat coastal plain drained by Vince Bayou and an engineered channel network, and parts of the city are in mapped flood hazard areas.

Where a property is in a Special Flood Hazard Area, flood insurance is federally required, escrowed, and counts in your debt-to-income ratio — which interacts directly with the variable income question above. A borrower whose overtime is only partly countable and whose flood premium is high can find the two problems compounding.

The full flood mechanics are on our Houston page, and the process for challenging a determination is on our Lewisville page. Get the determination and an actual insurance quote during the option period, because in this market both numbers materially change what you qualify for.

Industrial proximity and the appraisal

Pasadena's residential neighborhoods sit close to refining and petrochemical operations along the ship channel, and that is relevant to an appraisal.

An appraiser is required to note external conditions affecting marketability — heavy industrial adjacency, major arterials, rail. It rarely blocks a loan. It can produce a value adjustment, and on a property directly adjacent to industrial use the comparable set is typically drawn from similarly situated homes, which is the correct method.

What this means practically: a home backing an industrial buffer will appraise against other homes backing industrial buffers, not against the same floor plan two miles away. That is not a penalty, it is an apples-to-apples comparison — but it is worth understanding before you assume a listing price reflects it.

Harris County taxes

Combined rates in Pasadena generally run in the 2.3% to 2.9% range — City of Pasadena, Harris County, the Harris County Flood Control District, the Port of Houston Authority, Harris Health, San Jacinto College, and your school district.

Pasadena addresses feed Pasadena ISD for the most part, with portions in Deer Park ISD, La Porte ISD and Channelview ISD. Verify by address.

Verify the parcel with the Harris County Appraisal District. A sale resets the appraised value and the seller's exemptions end at closing. File your homestead exemption the year you buy.

Where people buy

Golden Acres and the older south side hold the 1940s and 1950s stock closest to the original townsite.

Central Pasadena along Southmore and Shaver carries the 1960s and 1970s bulk of the inventory.

Southeast Pasadena toward Fairmont Parkway is the newer end, with 1980s and 1990s construction and larger lots.

Red Bluff and the eastern edge run toward Deer Park and La Porte, with different school districts and different rates.

Clear Lake and the far south move into a separate submarket around the NASA corridor.

The city

Pasadena was founded in 1893 by Colonel John H. Burnett, who named it for Pasadena, California, on account of the lush vegetation along Buffalo Bayou.

The 1900 Galveston hurricane flattened the settlement, and the 1901 Spindletop strike near Beaumont set off the oil development that would define the region. Refining arrived along the ship channel and never left.

Gilley's, the club that anchored the 1980 film Urban Cowboy, operated here from 1971 until it burned in 1990, and for a time was billed as the largest honky-tonk in the world.

The Pasadena Strawberry Festival has run since 1975, commemorating the crop the area was known for before the refineries, and claims the world's largest strawberry shortcake.

Armand Bayou Nature Center to the south protects roughly 2,500 acres of coastal prairie, forest and marsh — one of the largest urban wilderness preserves in the country — and San Jacinto Battleground State Historic Site, where Texas independence was won in 1836, sits just north of the city with the San Jacinto Monument standing over it.

Not sure which fits? Compare every loan program we place.

Frequently asked questions

Will lenders count my overtime? Generally yes, averaged over a two-year history with a stable or rising trend. Some programs accept a 12-month history where the employer confirms the overtime is regular and expected to continue.

How is shift differential treated? More favorably than overtime when it is a fixed premium on a regular schedule — it is often treated as part of base pay. Make sure it appears as a consistent, separately identified line on your pay stubs and verification of employment.

Does turnaround and shutdown pay count? It can, with a two-year history showing the pattern repeating and an employer statement confirming it is a recurring feature of the role. It is treated more cautiously than regular overtime because it is episodic by design.

Is per diem counted as income? Usually not. Per diem is a reimbursement rather than compensation, and where it is counted the associated expense generally offsets it. Do not plan a purchase price around it.

What if my overtime dropped this year? Most underwriters will use the lower figure, and some will decline to use variable income at all until it stabilizes. This is the most common reason a Pasadena file qualifies for less than expected, and it is why a pre-approval review before shopping matters.

What are property taxes in Pasadena, TX? Combined rates generally run about 2.3% to 2.9%, varying by school district. Verify the parcel with the Harris County Appraisal District.

Does being near a refinery affect my loan? It affects the appraisal rather than the approval. Appraisers note external conditions affecting marketability and will typically draw comparables from similarly situated homes, which is the correct method.

Get the variable half of your income reviewed first

Base pay is easy to qualify on and it is rarely the whole story here. The difference between a file that captures overtime, differential and turnaround pay and one that does not is frequently a hundred thousand dollars of buying power.

Send us two years of W-2s and a current stub. We will tell you what an underwriter will actually use.

Start your application · Run the numbers · Call 737-347-1314

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