FHA Guidelines On Employment Gaps And Job Seasoning Requirements

This BLOG FHA Guidelines On Employment Gaps And Job Seasoning Requirements Was UPDATED On June 26, 2017

FHA Guidelines On Employment Gaps allows gaps in employment in qualifying for FHA Loans.

  • One of the questions asked by lenders is two year employment history.
  • Most mortgage lenders require borrowers employed for two years on the same job. 
  • FHA Guidelines On Employment Gaps only require an overall two year employment history and gaps in employment is allowed.
  • FHA Borrowers can qualify for a mortgage loan even if they change jobs in the past two years and have a brief periods of unemployment. 
  • Job longevity shows stability. 
  • However, mortgage lenders do understand that temporary unemployment and job changes happens.

Income Documents Required In Mortgage Process

One of the requirements to qualify for a mortgage loan is to show proof of two years tax returns and two years W2s.

  • If a mortgage loan borrower has been  laid off in the past two years, they may still qualify for a mortgage loan. 
  • If a mortgage loan borrower has been laid off for six months or less and starts a new job, they can still qualify for a mortgage loan right away. 
  • For example, say John Smith has been employed as an electrical engineer for ten years and he got laid off last November of 2012. 
  • He just started a job as an insurance agent March 1, 2013 and his income is the same as his prior job as an electrical engineer. 
  • Even though John Smith has changed professions and have been laid off for four months and started a new job, he can still qualify for a mortgage loan. 
  • As long as the mortgage loan underwriters feel that his current job as an insurance agent is stable and he can prove that he will be employed in the future with the same company, he will qualify for a FHA mortgage loan.

 2 Year Employment History Requirements

The fact that he is making the same amount of money as he did previously as an electrical engineer would be even a greater benefit.

  • If John Smith was laid off for more than six months, there are different mortgage underwriting requirements regarding job longevity.

Gaps In Employment

If John Smith had been laid off for more than six months and started his new job as an insurance agent, there is a six month job longevity requirement before he can apply for a mortgage loan.

  • For example, if John Smith has been laid off as an electrical engineer July 1, 2012 and just started his new job as an insurance agent on March 1, 2013, John Smith would not qualify for a mortgage loan until he has been on his new job for at least six months.
  • He will qualify once has been working as an insurance agent for at least six months which will be September 2013. 
  • The reason mortgage lenders want to see job longevity is because they want to make sure that the mortgage loan borrower is stable and will continue being employed in the future.

Lender Overlays

  • Lender overlays are additional guidelines imposed by lenders in addition to the minimum HUD Guidelines. The Gustan Cho Team specializes in government and conventional loans with no lender overlays.

Home buyers and homeowners who have any questions on job longevity and mortgage qualification, please contact us at 1-800-900-8569 or email us at gcho@gustancho.com.

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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