Employer Distance Requirements on Primary Home Mortgages

In this blog, we will cover employer distance requirements on primary home mortgages. Employer Distance Requirements On Primary Home Mortgages is a requirement on all loan programs. Lenders want to make sure that the distance from the new home purchase to their work location is reasonable. FHA, VA, and USDA loans (Government Loans) only offer primary home loans. Government Loans do not offer second home and investment property mortgages. Conventional Loans do allow second home and investment property mortgages. Homebuyers with remote jobs can purchase a home anywhere in the U.S.

Employer Distance Requirements For Remote Wage Earners

One of the mortgage lenders’ primary concerns is the proximity the homebuyer lives from their places of employment. For example, if an Illinois borrower is buying a primary residence in Tennessee, this will cause concerns for a mortgage underwriter. Let’s take a case scenario where a homebuyer is currently residing in Chicago, Illinois and the employer is located in Chicago and they are purchasing a home in Tennessee.

Letter of Explanations To Mortgage Underwriters

There are no branch offices within commuting distance in the area in Tennessee the homebuyer is buying the home. This will automatically alert the mortgage underwriter. The underwriter will need an explanation. Most explanations in this type of case scenario are the homebuyer is a remote wage earner.

Remote job positions are becoming more and more popular. The mortgage underwriter will want to see the documentation verifying this. Lenders will contact the employer via Verification Of Employment and address this issue. The VOE needs to state verbiage that the employee is a remote worker and does not have to report to a brick-and-mortar physical location.

How Underwriters Analyze Remote Wage Earners

Borrowers with a long employment history working from home as remote wage earners will not have as much scrutiny as those who just started as remote employees. Mortgage underwriters will carefully analyze that the borrower is a legitimate remote employee and not state they are remote workers for the sake of getting away with the employer distance requirements. As long as the borrower can get a letter from the employer stating they are a remote employee, the employer distance requirements are waived.

Mortgage Rates And Down Payment Requirements on Primary Versus Second And Investment Homes

Government Loans (FHA, VA, USDA) are for primary home residences only. Fannie Mae and Freddie Mac allow for second and investment property loans. The main reason primary home loans are preferable is due to the following factors:

• Primary homes have lower mortgage rates
• Primary homes have lower down payment requirements
• Primary homes have lenient agency guidelines
• Primary homes have larger seller concession guidelines

Primary homes have higher debt-to-income ratio caps than secondary and/or investment homes.

Maximum Employer Distance Requirements And Guidelines

There are no set maximum Employer Distance Requirements for primary home mortgages. However, most lenders want to see that a homebuyer has a reasonable distance to their place of employment. In general, lenders want to see no more than a 60 miles distance from a borrower’s primary residence to their place of employment. This is exempt for remote employees. If the distance is more than 60 miles, each case will be evaluated on a case-by-case scenario.

For more information about this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.