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Employment Gaps Mortgage Guidelines For Home Buyers

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Employment Gaps Mortgage Guidelines For Home Buyers

This BLOG On Employment Gaps Mortgage Guidelines For Home Buyers Was UPDATED On May 12th, 2019

Gaps in employment happen to the best of us.

  • Most workers who transfer jobs voluntarily due to a better position or employment offer do not experience gaps in employment
  • They just time the start of the new employment with the resignation of the current employment
  • Gaps in employment is not a problem for workers who are in a field that is in demand
  • However, workers who get terminated often times have difficulty finding work
  • May take them months on their job search
  • Lenders require two years of employment history for the home buyer to be able to qualify for home loans
  • However, there is nothing in lending guidelines that state they cannot have gaps in employment in the past two years
  • Borrowers can have had multiple jobs and/or gaps in employment in the past two years and still qualify for home loans
  • However, many lenders may have overlays
  • They require borrowers need to have been in the same job in the past two years
  • If told that they do not qualify by a lender due to gaps in employment or multiple jobs in the past two years, find a lender that does not have such investor overlays

Rules With Regards To Employment Gaps Mortgage Guidelines

Per Employment Gaps Mortgage Guidelines, borrowers unemployed six months or less and just got a new job, they need 30 days of paycheck stubs from a new job to close on a mortgage loan.

  • As soon as borrowers get a new full-time job, they are able to apply for a mortgage loan
  • Cannot close on mortgage loan until they have been on a new job for at least 30 days
  • Need to provide 30 days of paycheck stubs
  • If unemployed for six months or more and got a new full-time job, they can qualify for a mortgage loan after they have been on a new full-time job for six or more months
  • There are exceptions to this rule
  • If unemployed for six or more months but got job back from a former employer, the six month waiting period on a new full-time job does not apply
  • Full-time students who just got a new full-time job, the six month waiting period on the new job does not count
  • Full-time school is considered the same as full-time employment under the eyes of lenders
  • Also, veterans deployed for military duty, the six month waiting period is also exempt

Gaps In Employment And Bad Credit

Job loss is one of the leading factors for consumers having bad credit.  It is often difficult to make all of the minimum monthly credit payments on time if consumers have no source of income to pay it.  Mortgage lenders do understand this. However, to qualify for a mortgage loan, borrowers need to have been timely on monthly payments for the past 12 months.  Credit scores can really plummet even with one late payment. Borrowers with multiple creditors and are late in making monthly minimum payments, credit scores can easily plummet.  Potential home buyers need to keep this in mind.

Related> FHA Guidelines on Employment History

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