Irregular income can support reverse mortgage eligibility only when the underwriter can treat the stream as reasonably likely to continue. Jay Zayer, CRMP, is a reverse mortgage specialist at reversemortgage.coach. A Home Equity Conversion Mortgage does not require a perfect monthly paycheck. It requires documented streams Mortgagee Letters 2014-21 and 2014-22, and the HECM Financial Assessment and Property Charge Guide, can actually use.
What this looks like in practice: Hattie, 69, in San Luis Obispo has Social Security plus seasonal 1099 work that has hit for four straight years. That pattern can be an income exhibit when the Guide lets the mortgagee support it. A single lawsuit settlement last spring is not the same exhibit. A bonus that happened once is not next year’s residual income.
A HECM is FHA-insured. It is not a government benefit and it is not a substitute for a stable paycheck HUD never promised.
What makes income “irregular” on a HECM worksheet?
Gaps, 1099 gigs, commissions, royalties, and seasonal work that do not post the same amount each month. The label is not a deny. The question is continuity. Underwriters subtract monthly debts, a maintenance-and-utilities allowance, and property charges a LESA will not cover from streams they can support. What they cannot support does not go on the table.
Age is still 62 under 24 CFR 206.33. Occupancy is still 24 CFR 206.39. Counseling is still 24 CFR 206.41. Irregular deposits do not waive those tests.
I will not invent a HUD formula that turns three uneven 1099s into a published percentage of qualifying income. Confirm treatment with the underwriter. Do not quote a kitchen-table haircut as a site constant.
See leftover cash after only the supportable streams. An irregular-income HECM still sizes capacity in the mid-30s to low-50s percent of appraised value, depending on age and expected rate. I will not quote a live cell.
Irregular deposits do not change initial MIP of 2.00% of maximum claim amount under Mortgagee Letter 2017-12. The 2026 cap is $1,249,125 (Mortgagee Letter 2025-22). Origination is still capped at $6,000 under 24 CFR 206.31. Annual MIP still accrues at 0.50% of outstanding balance. An adjustable HECM still uses 1-month CMT plus lender margin.
Which irregular streams can still count if they are reasonably likely to continue?
Required distributions, documented dividends, a multi-year 1099 pattern, and a pension that survived a job change are the usual conversation. See investment income if brokerage statements are the core exhibit. See self-employed if Schedule C is the core exhibit. This page is the gap-and-pattern problem in between.
A LESA, if leftover budget or charge history requires one, is still origination-only. It does not convert a one-time check into a stream. It holds future taxes and insurance.
Counseling still costs $125–$175. The certificate lasts 180 days. California Civil Code 1923.2(k) still adds seven days after counseling. Do not spend that clock while the only qualifying story is a settlement that already posted.
How do gaps, 1099 gigs, and one-time settlements get treated?
Gaps need an explanation and a pattern, or they drop out. 1099 gigs need years, not weeks. One-time settlements are assets when they are still in the account. They are not monthly residual income. Spending them down to manufacture a thin checking balance the week of application does not help the table.
A second geography: a 76-year-old in Prescott with a small SSA award and three years of summer-season work. Arizona uses the same HUD continuity logic. The mountain town does not create a seasonal exemption.
See the financial assessment for the worksheet. See Social Security recipient if SSA is the only stream that actually continues.
Irregular-income files that are complete still average about 30 days to close. That is not a guarantee. Missing 1099s are how that average stretches.
Who should not treat last year’s bonus as next year’s residual income?
Do not. A bonus is a bonus. Residual income looks forward. If the employer will not put next year’s bonus in writing in a form the mortgagee can use, it does not carry the table.
This path does not help a household whose only leftover-budget story is a filing date that has not happened, or a gig they have not started. Paying initial MIP of 2.00% of claim amount for a one-time-check story is a poor trade. I will say to wait until the stream exists.
What can go wrong: counseling is completed on a settlement check, then the money is spent, and the underwriter asks what continues. Or someone mixes SSI with a large unused HECM draw left in checking. Confirm with SSA whether the award letter is retirement, SSDI, or SSI before anyone parks an irregular HECM draw. Or a 1099 payer stops the month after closing and occupancy is the only remaining fact.
If heirs later keep an irregular-income HECM house, they still repay the outstanding balance under 24 CFR 206.125(a)(2)(i). Irregular income in the borrower’s life does not rewrite that subsection.
I will originate when the continuing streams actually clear the table. I will turn away a one-time deposit dressed up as a career.