- Yes, reported tips count toward an FHA loan. HUD lets a lender use tip income you have received for two years that is likely to continue.
- The lender uses the lower of two averages. One is your two-year average. The other is your last year. A good year is not counted at full value right away. A bad year is.
- One year of tips can be enough. HUD allows a shorter history if your tips were steady for at least 12 months.
- Cash tips you never reported do not count. HUD only counts income that is properly reported on your tax returns.
- The new no tax on tips deduction does not shrink your loan income. It lowers the tax you owe. Your W-2 still shows the tips, and that is what the lender reads.
Yes. An FHA loan counts the tips you report as part of your income.
HUD is the federal housing agency that runs FHA loans. Its rulebook lets a lender use tip income once you have received it for two years and it is likely to continue.
The lender averages your tips two ways and uses the lower number. A dealer with $38,400 in tips one year and $43,200 the next gets $3,400 a month counted, not $3,600.
The catch is the word reported. A tip that never reached your pay stub, your W-2 or your tax return does not exist to an underwriter (the person who checks your file and signs off on the loan).
This matters in Las Vegas more than almost anywhere. The Las Vegas metro had 15,530 gambling dealers in May 2025, says the Bureau of Labor Statistics. That is about 25 times the share of jobs dealers hold nationwide.
Add 36,160 waiters and waitresses and 13,730 bartenders. Those three tipped jobs alone make up about 1 in every 17 jobs in the metro.
In short. Reported tips count toward an FHA loan once you have two years of them, or one steady year. The lender takes your two-year average and your last-year average and uses the lower one.
Cash tips you never reported cannot be counted at all. If you plan to buy in the next year or two, report every tip starting now.
Do tips count as income for an FHA loan?
Tips count as income for an FHA loan when you have two years of them and they are likely to keep coming. HUD puts tips in the same group as overtime and bonuses.
HUD's rules for FHA loans live in one book, Handbook 4000.1. It uses the term effective income, which means the income a lender is allowed to count when it qualifies you. Here is the rule that makes tips effective income:
"The Mortgagee may use Overtime, Bonus, or Tip Income as Effective Income if the Borrower has received this income for the past two years and it is reasonably likely to continue."
HUD, FHA Single Family Housing Policy Handbook 4000.1, page 227, last revised 8/12/2026: https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf
In that sentence, the mortgagee is simply the lender. Likely to continue means your job still produces tips. A dealer who is still dealing, or a server who is still serving, clears that part easily.
This page covers tips paid to you as an employee, on a W-2. If you work as an independent contractor and get a 1099, FHA treats you as self-employed instead. Read how FHA works for self-employed and 1099 workers in Las Vegas for that version.
How does FHA calculate tip income?
FHA calculates tip income by taking two averages and using the lower one. It never simply adds up your best year.
"For employees with Overtime, Bonus, or Tip Income, the Mortgagee must calculate the Effective Income by using the lesser of: the average Overtime, Bonus, or Tip Income earned over the previous two years or, if less than two years, the length of time Overtime, Bonus, or Tip Income has been earned; or the average Overtime, Bonus, or Tip Income earned over the previous year."
HUD, FHA Single Family Housing Policy Handbook 4000.1, page 227, last revised 8/12/2026: https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf
In plain terms, the lender works out two numbers:
- Your two-year average. Add up two years of tips and divide by 24 months.
- Your last-year average. Take the most recent year of tips and divide by 12 months.
Whichever is smaller is the tip income that counts. Your base hourly wage is added on top.
A dealer earns $12.00 an hour for 40 hours a week. That is $24,960 a year, or $2,080.00 a month in base pay.
Her W-2s show $38,400 in tips for 2024 and $43,200 for 2025. Her two-year average is $81,600 divided by 24, or $3,400.00 a month. Her last-year average is $43,200 divided by 12, or $3,600.00 a month.
Tips that count: the lower figure, $3,400.00 a month. Total qualifying income: $2,080.00 plus $3,400.00, or $5,480.00 a month.
Now flip her years. Say she earned $43,200 in 2024 and $38,400 in 2025. The two-year average is still $3,400.00 a month. But last year is now only $3,200.00 a month, so $3,200.00 is what counts. Her total drops to $5,280.00 a month.
Illustrative figures only, not a quote, offer, or commitment to lend. Your pay, hours, and tips will differ, and all loans are subject to credit, income, property, and underwriting approval.
Same dealer, same total tips over two years. The order of the years moved her counted income by $200.00 a month.
If your tips are rising
The two-year average is the smaller number, so it is the one that counts. Your best year gets diluted by the year before it.
If your tips are flat
Both averages land in the same place. What you earn is roughly what counts.
If your tips are falling
Last year is the smaller number, so the drop counts in full. A lender may also ask why your tips fell.
If your hours also move around from week to week, your base pay gets averaged too. HUD says a lender must average two years of hourly income when the hours vary. A dealer on a fixed 40-hour schedule avoids that step, so ask your payroll office for a letter confirming your scheduled hours.
What if you have less than two years of tips?
An FHA lender can still count less than two years of tips, as long as you have at least one full year of steady tips. HUD writes that in right after the two-year rule.
The handbook says a shorter period may count if the lender documents that the tips were earned consistently for at least one year and are likely to continue. The averaging rule then runs over the months you have, instead of 24.
Under one year is a different story. Plan on qualifying with your base wage alone, and let the tips build a history in the background.
A move from one Strip property to another does not have to reset anything. What the lender looks at is whether the tip income itself has been steady. A change from a tipped job to a salaried one is different, because the tips will not continue.
Short histories are a common reason a file gets a closer look. If an automated approval does not come back, a person reviews the file by hand, and how FHA manual underwriting works in Nevada explains what that person checks. The same tip rule applies there, on page 306 of the handbook.
Do cash tips you never reported count?
An FHA loan cannot count cash tips you never reported. HUD shuts that door in its general income rules:
"The Mortgagee may only consider income if it is legally derived and, when required, properly reported as income on the Borrower's Tax Returns."
HUD, FHA Single Family Housing Policy Handbook 4000.1, page 223, last revised 8/12/2026: https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf
The IRS rule behind this is simple. An employee who gets $20 or more in cash tips in a month has to report them to the employer in writing. The deadline is the 10th of the next month.
Tips reported that way flow onto your pay stub and your W-2. Tips that skip that step only reach the government through your tax return. You add them on Form 4137, the IRS form for tips you did not report to your employer.
Here is what skipping it costs. Every $100 a week in cash tips you keep off the books is $5,200 a year. That is $433.33 a month of income a lender cannot use, no matter how real it was.
The fix is dull and it works. Start reporting every tip this month. Your history starts the day your reporting does, so a buyer planning a purchase in 2028 should start now. Your credit is the other half of the file, and the FHA credit score requirements for Las Vegas show where the floors sit.
Which kinds of tip income count, and how?
An FHA lender counts every kind of tip the same way, as long as it shows up in a record the lender can check. Here is how the common Las Vegas setups line up.
How FHA treats each kind of tip income
| How you get the tip | Where it shows up | Counts for FHA? | How it is counted |
|---|---|---|---|
| Card tips paid through payroll | Pay stub and W-2 | Yes | Lower of the two-year and last-year averages |
| Pooled dealer tips paid through payroll | Pay stub and W-2 | Yes | Same averaging rule |
| Cash tips you reported to your employer | Pay stub and W-2 | Yes | Same averaging rule |
| Cash tips added only on Form 4137 | Your tax return, not your W-2 | Lender's call | Bring your returns and confirm with the lender before you count on them |
| Tips as a 1099 contractor | 1099 and Schedule C | Yes, as self-employment | Net profit after expenses, usually two years of returns |
| Cash tips never reported | Nowhere | No | Not counted |
If your tips are pooled with a crew, Nevada law allows that. Under NRS 608.160, employees may agree to divide their tips among themselves. When the pool is paid through payroll, it shows on your pay stub and W-2 like any other tip, which makes it easy for a lender to verify.
Bring two years of W-2s and your latest pay stub. A loan officer can run the two averages on your real numbers and tell you what counts.
Soft credit check to start, no impact to your score. All loans are subject to credit, income, property, and underwriting approval. Not a quote, offer, or commitment to lend.
Check my FHA optionsCheck how your own tips would count
The FHA tip income check below applies HUD's rule to your own numbers. Enter your base pay and the tips on your last two W-2s.
FHA tip income check
Uses HUD's averaging rule from Handbook 4000.1, page 227. Illustrative only, not a quote, offer, or commitment to lend.
Your tips are rising, so the two-year average is the lower number and is the one that counts. About $5,480.00 a month could count toward qualifying.
This assumes your hours do not vary. If they do, a lender averages your base pay over two years too. With one to two years of tips, a lender averages over the months you actually have, so treat the result as an upper limit. Your real number comes from your documents and a full review.
Does the no tax on tips deduction lower your FHA income?
The no tax on tips deduction does not lower your FHA income. It lowers the tax you owe, not the tips a lender counts.
The deduction came from the 2025 federal tax law. The IRS says it lets eligible workers deduct up to $25,000 of qualified tips a year. It starts phasing out above $150,000 of modified adjusted gross income, or $300,000 for joint filers.
IRS Notice 2025-69 says it applies to tax years 2025 through 2028. You claim it on your return, on a form called Schedule 1-A.
Here is why it leaves your loan alone. The deduction happens on your tax return, after your W-2 is printed. Your W-2 and pay stubs still show every tip you earned, and those are the records a lender reads for an employee.
So a dealer with $43,200 in tips still shows $43,200 to the lender. If anything, the deduction helps from the other side. Less tax can mean more money saved for closing costs. Ask a tax professional how it applies to you.
How does Nevada's $12 minimum wage help a tipped buyer?
Nevada's minimum wage gives every tipped worker at least $12.00 an hour in base pay before a single tip. That gives a tipped buyer a solid floor under the loan file.
In many states, employers can pay tipped workers a cash wage as low as $2.13 an hour and count tips toward the rest. That is the federal floor, per the U.S. Department of Labor. Nevada does not allow it. The Labor Commissioner's 2026 bulletin sets the minimum at $12.00 from July 1, 2026.
State law also protects the tips themselves. Under NRS 608.160, an employer cannot take any part of your tips. It also cannot count them toward the minimum wage. Workers may still agree to pool tips among themselves.
For a loan, that base wage matters. When your hours do not vary, HUD tells the lender to use your current hourly rate. So a full-time tipped worker in Las Vegas brings at least $2,080 a month of steady base pay, before the tips are averaged in.
That base pay plus your counted tips is the income your debts get measured against. How FHA debt-to-income ratios work in Nevada shows that step, which compares your monthly debts to your monthly income.
What paperwork does a tipped worker need for an FHA loan?
An FHA file for a tipped worker needs two years of proof, because HUD will not count tips from a single pay stub. Gather these before you apply:
- Your most recent pay stub showing year-to-date earnings, with tips listed.
- Two years of W-2s, which show your tips in the wage boxes.
- A written verification of employment, if the lender asks for one. That is a form your employer's payroll office fills out covering two years of pay.
- Two years of federal tax returns, especially if any tips were added on Form 4137.
- A letter on your schedule, if your hours are fixed. It helps show your base pay does not vary.
Why two years? HUD lets a lender skip checking past jobs only when the file uses base pay alone, with no overtime, bonus or tip income. The moment tips go into the math, the two-year paper trail is required. That is on page 225 of the handbook.
What should a Las Vegas tipped worker do before applying?
A Las Vegas tipped worker should line up the numbers before shopping for a house. Four steps, in order:
- Report every tip, starting now. Your history only counts from the day it is on paper.
- Pull your last two W-2s and find your tip totals. Run them through the tool above.
- Check the price range. The 2026 FHA limit for a one-unit home in Clark County is $541,287, and the Clark County FHA loan limits page has the rest.
- Look at down payment help. Nevada's programs have their own income limits, and your tips count toward them. Down payment assistance in Las Vegas lists what is open in 2026.
For the full picture of the loan itself, start with the complete Nevada FHA loan guide. The parent company also keeps a plain overview of FHA loans for Las Vegas buyers, including how they compare with other loan types.
The bottom line
An FHA loan counts your tips when they are on paper. Two years of reported tips, or one steady year, is the entry ticket.
From there the lender averages your tips two ways and uses the lower one. Rising tips get diluted by the older year. Falling tips count at the lower level. Cash you never reported counts for nothing.
If you plan to buy in the next year or two, the best move costs nothing. Report every tip, keep your W-2s, and check your FHA options with a local loan officer who can run the averages on your real numbers.
Article history
- September 27, 2026 · Published. Built from HUD Handbook 4000.1, Update 18, last revised 8/12/2026, downloaded as a PDF and read rather than summarized, for the tip income standard and averaging rule, the reported-income rule, and the two-year documentation rule.
- September 27, 2026 · Las Vegas job counts pulled from the source. Dealer, server and bartender counts and the dealer concentration figure were read from the Bureau of Labor Statistics May 2025 table for the Las Vegas-Henderson-North Las Vegas metro.
- September 27, 2026 · Tax and wage rules read at the source. The tip deduction figures come from IRS Notice 2025-69 and the IRS explainer, and the $12.00 minimum wage from the Nevada Labor Commissioner's 2026 bulletin.
Frequently asked questions
Do tips count as income for an FHA loan?
An FHA loan counts tips if you report them. HUD lets a lender count tip income when you have received it for the past two years and it is reasonably likely to continue.
Tips that show on your pay stubs, W-2s or tax returns can count. Cash tips you never reported cannot.
How does FHA average tip income?
The lender works out two averages and uses the lower one: your average tips over the past two years, and your average tips over the past year.
If your tips went up last year, the two-year average is used. If they went down, last year's lower figure is used.
Can I use tip income with less than two years of history?
Sometimes. HUD allows tips earned for less than two years when the lender documents that they were earned steadily for at least one year and are reasonably likely to continue.
Under one year of tips, plan on qualifying with your base wage alone.
Do unreported cash tips count for an FHA loan?
No. HUD only lets a lender count income that is legally earned and, when required, properly reported on your tax returns.
The IRS requires employees to report cash tips to their employer when they reach $20 or more in a month. Tips that were never reported do not exist to a lender.
Does the no tax on tips deduction lower my FHA qualifying income?
No. The federal deduction lowers the tax you owe on up to $25,000 of qualified tips a year for 2025 through 2028.
It does not remove tips from your W-2 or pay stubs, and those are the records a lender reads.
Does Nevada let employers count tips toward the minimum wage?
No. Under NRS 608.160, a Nevada employer cannot take your tips or use them as a credit toward the minimum wage, which is $12.00 an hour from July 1, 2026.
That means your base pay is steady before tips, and base pay usually counts at its current hourly rate when your hours do not vary.
What documents does a tipped worker need for an FHA loan?
Plan on your most recent pay stub with year-to-date earnings and two years of W-2s, or a written verification of employment covering two years.
Bring two years of tax returns too, especially if any tips were reported on Form 4137.
Can casino dealers get an FHA loan?
Yes. A dealer paid on a W-2 qualifies like any tipped employee: base pay plus reported tips, averaged under HUD's rule.
Pooled tips paid through payroll show on your pay stubs and W-2, which makes them easy for a lender to verify.
Sources
- Every FHA rule on this page. HUD, FHA Single Family Housing Policy Handbook 4000.1, Update 18, last revised 8/12/2026: page 223 for legally derived and properly reported income, page 225 for when past employment must be verified, page 226 for hourly pay, page 227 for the tip income standard and averaging rule, and page 306 for the same rule on manually underwritten files: hud.gov (downloaded and read September 27, 2026)
- The handbook's home page, for the current version: hud.gov (read September 27, 2026)
- Las Vegas tipped job counts. U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, May 2025, Las Vegas-Henderson-North Las Vegas, NV: gambling dealers 15,530 with a location quotient of 25.31, waiters and waitresses 36,160, bartenders 13,730, all occupations 1,136,960: data.bls.gov (read September 27, 2026)
- Reporting tips to your employer. IRS, Tip recordkeeping and reporting: irs.gov (read September 27, 2026)
- The no tax on tips deduction. IRS, What the no tax on tips deduction means for you: irs.gov (read September 27, 2026)
- The tax years the deduction covers. IRS Notice 2025-69: irs.gov (downloaded and read September 27, 2026)
- Nevada's 2026 minimum wage. Nevada Labor Commissioner, 2026 Minimum Wage Annual Bulletin, posted June 29, 2026: labor.nv.gov (downloaded and read September 27, 2026)
- Nevada's tip protection. Nevada Revised Statutes, NRS 608.160: leg.state.nv.us (read September 27, 2026)
- The federal tipped cash wage. U.S. Department of Labor, Minimum Wages for Tipped Employees: dol.gov (read September 27, 2026)
- The 2026 Clark County FHA limit. HUD, FHA Mortgage Limits lookup, Las Vegas-Henderson-North Las Vegas, CY2026: entp.hud.gov (read September 27, 2026)
The rest of the Nevada FHA library. Tip income touches several of these: