2 Year Employment History And Residence History
By Gustan Cho
To qualify for a residential mortgage loan, two things are mandatory: 2 year employment history and 2 year residence history. There is only one exception to the 2 year employment history and that is school transcripts. Vocational school, trade school, college, graduate school, and professional school transcripts can be used in lieu of the 2 year employment history requirement. For example, if a home buyer went to college right out of high school and then went on to graduate school and had not had a single job but just got a job after graduating graduate school, that home buyer will qualify for a residential mortgage loan even though he has not worked a day in his life. His past two years graduate school transcripts will serve as his 2 year employment history.
Besides two year employment history, a mortgage loan applicant needs two year residence history as well. The mortgage loan applicant can be living with family or renting his or her own home but the two year residential history is required and needs to be documented.
Gaps In Employment
When a mortgage lender asks for 2 year employment history, they do not require a straight 2 year continous employment history. The mortgage loan applicant can be employed currently for six months and they could have been unemployed for the past 3 years. However, they would need the 18 months of prior employment history prior to his unemployment. Mortgage lenders just want to see that the mortgage loan borrower had been employed for 2 years, whether it has been continous and/or there were employment gaps and/or multiple jobs. This is the minimum mandatory guidelines set by HUD and Fannie Mae. Individual mortgage lenders may have their own mortgage lender overlays that surpass the minimum federal guidelines. For example, many banks, credit unions, mortgage lenders do have their own mortgage lender overlays where there cannot be any gaps in employment for the past two years and do not like job hoppers in the past two years. This is not a federal mortgage lending guideline but their own. For example, all that is required to qualify for a mortgage loan via federal mortgage lending guidelines and to get an approve eligible per DU FINDINGS for a FHA and/or Conventional loan is that if you have been unemployed for six months or less and just got a new full time job, you need 30 days of paycheck stubs from your new employer in order to close on your mortgage loan. If you have been unemployed for six or more months, then you need to have been on your new job for at least six months to qualify for a residential mortgage loan. Banks and credit unions may have overlays where you need to have been employed with the same employer for the past two years or if you had a job switch that you need to have switched jobs in the same line of work. If you get denied or the banker tells you that you do not qualify for this reason, go somewhere else where they will welcome you with open arms.
Cases Where Home Buyers Cannot Prove 2 Year Employment History
There are cases where a home buyer cannot prove the 2 year employment history. For example, if an immigrant comes to this country and lands a good paying job and just got his or her green card, they do not have 2 year employment history so they could not qualify for a conforming mortgage loan even though they can afford the housing payments. They would have to wait 2 years and get 2 year employment history seasoning in order for them to qualify for a residential mortgage loan.
Other common cases are when a worker works full time and have been working full time in this country but had no green card. The employer paid them cash so there is no documented income. The worker then gets legal and gets a green card and social security card and the employer now pays them via payroll check and are now classified W-2 employee status. Even though the worker has worked for many years for his employer, he cannot qualify for a residential mortgage loan due to not having documented income even though he has 2 year employment history.
Mortgage Loan Program For Those Without 2 Year Employment History
I can offer home buyers needing a mortgage loan without the 2 year employment history via a portfolio mortgage loan program. However, to qualify for the expatriate portfolio mortgage loan program, the mortgage loan borrower needs to have a 20% down payment, a maximum debt to income ratio of 40%, and one year’s reserves for principal, interest, taxes, and insurance. The expatriate portfolio mortgage loan program is a 30 year adjustable rate mortgage program available as 3/1 ARM, 5/1 ARM, and 7/1 ARM.