FHA Continuation Income Requirements And Guidelines
This BLOG On FHA Continuation Income Requirements And Guidelines Was UPDATED And PUBLISHED On May 17th, 2020
FHA Continuation Income Requirements state borrower’s income will likely to continue for at least three years.
- FHA have specific employment and income requirements and guidelines
- Borrowers can have employment gaps and qualify for FHA Loans
- Can have part time jobs and use the part time income and qualify for FHA Loans
- Borrowers can have bonus and overtime income and qualify
- Can have child support income, alimony income, and royalty income and qualify
- However, there are restrictions with all of these other types of incomes
- FHA Continuation Income Requirements will apply
- All income, where is used in addition to full time income such as bonus income, overtime income, part time income, child support income, alimony income, royalty income, social security income, and pension income all need to have the likelihood to continue for the next three years
In this article, we will discuss and cover FHA Continuation Income Requirements.
FHA Continuation Income Requirements On Employment
FHA allows borrowers with full time employment as well as part time employment to qualify for FHA Loans.
- With full time employment, gaps in employment is allowed within the past two years and multiple full time job changes are allowed in qualifying for FHA Loans
- Longevity in current employment shows stability to mortgage underwriters
- But changes of employment does not disqualify borrowers from qualifying for FHA Loans
- If you had an employment gap of less than six months, then there are no longevity seasoning requirements if you get a new full time job to qualify for a FHA Loan
- However, you will need 30 days of paycheck stubs from your new full time employer in order to close on your home loan as well as a written verification of employment from the current full time employer
- The full time employment needs to be secure and at least of 3 years of future employment needs to be likely
- If you had six or more months in employment gaps, you need to have worked at least six months on your new job in order to qualify
- Borrowers will need a written verification of employment from new employer
- The new employer needs to state that employment is likely to continue for the next three years
Using Other Income
In order to be able to use part time income, bonus income, overtime income, borrower needs at least a two year seasoning requirement and history of receiving stable income.
- In order to be able to use part time income, bonus income, and overtime income to qualify for a mortgage loan, those income needs to likely continue for the next three years
- Borrowers can use child support income, alimony income, and royalty income to qualify for a FHA Loan if and only if these types of income is likely to continue for the next three years
- Child support income and alimony is closely scrutinized to make sure that the income is likely to continue for the next three years
- Child support and/or alimony paperwork will be required by lenders to make sure the end date of the child support and/or alimony payments
- Same with royalty income
- Royalty income which is not permanent, proper paperwork will be required to make sure that the royalty income will continue for the next three years
Social security income and pension income are normally continued for the life of the mortgage loan borrower but the social security awards letter and the pension plan awards letter needs to be provided to the mortgage loan underwriter.
Nobody has a crystal ball what the future holds with one’s employment stability. However, lenders want as much reassurance as possible that the borrower’s income will continue for the next three years after they close on their home loans. The number one reason why mortgage loans default and the reason for foreclosure is due to borrower’s losing their jobs.