Short answer
Yes. On a Fannie Mae loan, a housing allowance, such as the parsonage allowance many clergy receive, or an automobile allowance from your employer can count as income once you've received it for at least 12 months. The lender adds the full allowance to your monthly income. It doesn't subtract it from the related cost, such as a car payment.
What will the lender need?
- An employer verification form, or your most recent paystub and W-2 showing the allowance.
- A verification of your job close to closing.
- A 12-month history of receiving the allowance.
How does a car allowance affect my debts?
The allowance is added to your income, and any car payment still counts as a monthly debt. Fannie Mae doesn't net the two together.
Can a tax-free allowance be adjusted upward?
Some housing allowances aren't taxed. When income is verified as nontaxable and likely to stay that way, Fannie Mae lets the lender add an amount to reflect the tax you don't pay. Ask your tax adviser how your allowance is treated, and share your tax documents with Tom.
How does FHA treat a car allowance?
HUD's Handbook 4000.1 counts the full car allowance as income when your employer has paid it for the past two years, and any car payment still counts as a debt.
Does this apply to the military housing allowance?
No, military allowances follow their own rule. See does military pay and BAH count for a mortgage.
Sources
- HUD Single Family Housing Policy Handbook 4000.1, Update 18 (August 2026), Automobile Allowances (TOTAL)
- Fannie Mae Selling Guide B3-3.3-04, Housing (Parsonage) and Automobile Allowances
- Fannie Mae Selling Guide B3-3.1-01, General Income Information (nontaxable income)
Checked November 2, 2026. Rules and dates change, so confirm current details before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.