This BLOG FHA Guidelines On Employment Gaps And Job Seasoning Requirements Was UPDATED On May 24th, 2019
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
- Gaps in employment are allowed
- Borrowers can qualify for a mortgage loan even if they change jobs in the past two years
- Allowed to have a brief period of unemployment
- Job longevity shows stability
- However, lenders do understand that temporary unemployment and job changes happen
Income Documents Required In Mortgage Process
One of the requirements to qualify for a mortgage loan is to show proof of two years of tax returns and two years W2s.
- If a borrower has been laid off in the past two years, they may still qualify for a mortgage loan
- If a 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 mortgage 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 mortgage
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 Mortgage Guidelines
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, here is a case scenario:
- if John Smith has been laid off as an electrical engineer on 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 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 are additional guidelines imposed by lenders in addition to the minimum HUD Guidelines. Gustan Cho Associates Mortgage Group 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 1-262-716-8151 or text us for faster response. Or email us at email@example.com.