Income Allowances and How They Affect Your Mortgage
Not all income is created equal when applying for a mortgage. Some borrowers receive additional payments called income allowances, and these can absolutely help you qualify for a home loan—if they’re documented correctly.
Let’s walk through what income allowances are, how they work, and how we handle them at Mortgage Mark for borrowers in Dallas, throughout Texas, and across the country.
What Are Mortgage Income Allowances?
Mortgage income allowances are extra payments you might receive on top of your base salary to cover specific expenses. These payments are common in certain industries and military roles, and they include:
- Automobile allowances
- Housing or parsonage allowances
- Military allowances like combat pay or rations
Each type is treated a little differently depending on how long you’ve received it, how it’s reported on your tax returns, and the mortgage program you’re using. At Mortgage Mark, we help borrowers throughout Texas, including those here in Dallas, make sure these income sources are counted correctly.
Automobile Allowance
Does a Car Allowance Count as Income for a Mortgage?
Yes, a car allowance can count as income—but it depends on how it’s structured. If your employer gives you a regular stipend to help with gas, maintenance, or car-related travel, and you’ve received it for at least two years, it may be included in your qualifying income.
This comes up often for sales professionals, consultants, and field workers—especially here in Dallas, where driving is a big part of the job. We’ve helped many clients throughout Texas qualify using properly documented auto allowances.
There are two ways to approach this:
1. Actual Cash Flow Method
If the allowance is reported on Form 2106 or Schedule C:
- Any extra funds above your actual car expenses can be added to your income
- If your expenses are higher than the allowance, that difference may be added to your debts
- If you itemize actual expenses, we’ll look at your lease or loan and adjust accordingly
2. Income and Debt Method
If the allowance isn’t reported on your tax returns:
- The full amount of the allowance may be added to your income
- The full car payment will also count as a liability
We’ll walk through both methods and use what helps you qualify while staying within guidelines.
Housing Allowance Income in Dallas and Across Texas
Housing allowance income is common for those working in churches, nonprofits, and ministries. In Dallas and throughout Texas, we work with many borrowers who receive these types of stipends to help with housing costs.
To qualify this as income:
- You need a 12-month history of receiving it
- It must be likely to continue for at least 3 more years
- It can be added to your income, but not used to directly offset your mortgage payment
For example, a pastor at a Dallas-area church might receive a parsonage allowance to help cover rent or housing costs. If it meets Fannie Mae or Freddie Mac guidelines, we can absolutely count that income when calculating your qualifying numbers.
Whether you’re based in North Texas, the Houston area, or elsewhere in the state, we’re familiar with these cases and can walk you through exactly what’s needed.
Note: Military housing allowances follow separate rules (see below)
Military Income Allowances
We’re proud to serve our military borrowers across Texas—from DFW to San Antonio, Killeen, El Paso, and beyond. Military income often includes several types of allowances in addition to base pay. These are usually counted as stable, qualifying income.
Common military allowances include:
- Combat pay
- Flight pay
- Hazard pay
- Rations and quarters allowances
- Clothing allowance
- Overseas pay
- Variable housing allowance
VA loans have very clear guidelines for counting these types of income, and we help active-duty service members and veterans throughout Texas get the credit they deserve.
Whether you’re stationed near Fort Cavazos, serving in the Air Force near Dallas, or transitioning out of active duty, we can help make your income work for your home loan.
Why Income Allowances Matter
Income allowances can have a big impact on how much house you can afford. For clients across Texas, these income sources have helped them qualify for higher amounts, better terms, and the homes they truly wanted.
But it all comes down to how it’s handled:
- Are you receiving it consistently?
- Has it been reported on your taxes?
- Does it meet Fannie Mae, Freddie Mac, or VA guidelines?
The sooner we know about it, the better we can structure your loan. These types of income can affect your debt-to-income ratio (DTI) and whether or not your loan is approved.
Frequently Asked Questions About Income Allowances
Does a car allowance count as income for a mortgage?
Yes, as long as you’ve received it for two years and it’s documented properly. We help many borrowers in Dallas and surrounding areas qualify using car allowances from employers.
Can housing allowance income be used to qualify for a mortgage in Texas?
Yes. If you’ve received housing allowance income in Texas for 12 months and expect to continue for three more years, it can be added to your income. It can’t be used to directly reduce your mortgage payment, though.
What percentage of income is allowed for a mortgage?
Most loan programs allow between 43% and 50% of your gross income to go toward your mortgage and other monthly debts. We’ll calculate your DTI based on all qualifying income, including allowances if they’re eligible.
Can other reimbursements like meals or entertainment count?
Only if they’re regular, documented, and part of your overall compensation. These are less common and usually reviewed case-by-case.
We’re Here to Help You Qualify
At Mortgage Mark, we help clients across Dallas, Fort Worth, and all over Texas understand and maximize their qualifying income. Whether it’s a housing allowance, car stipend, or military pay, we’ll make sure it’s reviewed correctly and give you the best shot at approval.
If you’re not sure whether your income counts, let’s talk early—before it becomes a problem. We’ll guide you through what paperwork is needed and how to document it upfront.
When you think mortgage, think Mark.

Mark Pfeiffer
Regional Sales Manager
Loan Officer, NMLS # 729612
(972) 829-8639
MortgageMark@MortgageMark.com