FHA Guidelines For College Graduates With No Work Experience

This BLOG On FHA Guidelines For College Graduates And High School Graduates With No Experience Was UPDATED On November 24th, 2017

One of the key requirements to qualify for a residential mortgage loan is to show a two year work prior work history and this can be a problem for a recent college graduates or high school graduates who just graduated from high school, college or technical school.

  • Many full time students had no work history while studying full time and might have gotten financial support via government student loans family, or odd and end temporary jobs
  • Some students, such as law school and medical school graduates have been unemployed for over 7 or 8 years and were professional students

Gaps In Employment

Others have taken time off work and went to school full time to learn a different trade such as the following:

  • Automobile mechanics
  • Dental technicians
  • Nursing students
  • Police Officer/Firefighters
  • Or other new profession

Changes Of Field Of Work

If someone changes their field of work, they normally need to take time off and go to school for certification. For example, a beautician needs over 2,000 hours of schooling to be eligible for certification. Same with police officers and fire fighters where they need at least 480 or more hours of schooling which means four to six months of full time training/schooling before entering their new work force.

  • Many full time students land great paying jobs in their field of studies after graduation
  • Unfortunately, many graduates have no work history, no established credit history
  • Some do not even have credit scores   
  • I get many calls from recent college graduates who just started a new job in their field
  • They ask me when they can apply for a residential mortgage loan because they do not want to be renter
  • The great news is that I can help recent graduates with no prior work history, no credit tradelines, and no credit scores 

FHA Guidelines For College Graduates With Zero Work Experience

Home Buyers who have just graduated from high school, college or technical school and have no work history that they can document can qualify for FHA Loans. The United States Department of Housing And Urban Development (HUD), which is the parent of the Federal Housing Administration (FHA), considers full time schooling the same as work experience.

  • I have mortgage loan programs for college graduates that as long as you can provide proof that you are working full time in their field of study, full time college education history can be used the same as work history
  • We normally average the prior two years tax returns or W2 income for income qualification but since full time students do not have prior earning histories, we will go off by their full time job offer letter and most recent pay check stub
  • We will probably require 30 days pay check stubs and a verification of employment from borrower’s current employer having them state that they are working full time and will continue to do so
  • The likely of continued full time employment for the next three years is required
  • School transcripts will be required and used in lieu of prior 2 years employment history

How About If Recent College Graduate Has No Credit Or Established Credit Tradelines

We can make exception if the recent college graduate does not have a credit score or no established credit tradelines with our mortgage loan programs for recent graduates.

  • We can use non-traditional credit such as the following:
    • Insurance payment
    • School tuition payment
    • Cellular phone bills
    • Utility payments
    • Other non-traditional credit from creditors that do not report to the three major credit reporting agencies
  • Those who have no credit scores due to lack of credit, can easily get a credit score by getting one or two secured credit cards
  • Mortgage Borrowers will get a credit score the next billing cycle
  • Make sure to only charge no more than 10% or less of credit limit from new secured credit cards to get the maximum credit score possible
  • If borrowers load up new secured credit cards to the credit limit, they will get a very low credit score, which is not what the purpose here is

FHA Guidelines For College Graduates Or Those In School and entering workforce does not require a two year requirement. Home Buyers who are recent graduates and want to qualify for a FHA Loan with a lender with no overlays, please contact The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends, and holidays.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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