This BLOG On How Do Mortgage Lenders View Periods Of Unemployment Was UPDATED On January 18th, 2019
Qualified income is extremely important when qualifying for a residential home loan. Can borrowers qualify with gaps in employment in the past two years? The answer to the above question is an absolute YES.
- Most lenders do want to see a solid two-year full-time work history from the same employer
- However, that is not often the case with some home buyers
- Lenders can have their own overlays
- Lenders can require two years of continuous work history with no gaps in employment history
- There are lenders that will be lenient with gaps in employment history
- This holds true as long as the borrower has had a prior two-year work history
- Borrowers can be off work for a year and still qualify for a mortgage loan
- This holds true as long as he or she has been employed for at least six months
- Any gaps in employment history six months or under require no seasoning requirement with the new job
- This holds true as long as they can provide a recent paycheck stub and verification of employment
Verification of employment needs to state that the borrower’s employment is likely to continue for the next three years.
How Do Mortgage Lenders View Periods Of Unemployment: Case Study On A Recent Closing
I just closed on a mortgage loan where the home buyer has gotten a mortgage loan denial by several lenders due to having gaps in employment history.
It was an extreme case and a great example of how I can get mortgage loan approvals for borrower’s who has gotten denied for a loan for having gaps in employment
Here is the case scenario:
- My borrower has taken 9 months off work in 2012 due to medical reasons
- She then went back to work and quit her job in February of 2013 within three weeks of returning to work
- Her hourly wage was $9.00 per hour
- She then got another job in March of 2013 making $12.00 per hour
- However, she only worked 20 to 30 hours per week due to her being on a probationary basis
- In September 2013 she completed the probationary period and was given a guaranteed 40 hours per week
- She applied for a mortgage loan with me on November 15, 2013, after getting denied by many mortgage lenders due to her gaps in employment
- I got a approve eligible via Fannie Mae’s Automated Underwriting System
- There are lenders with no lender overlays
- The approve eligible DU FINDINGS is the mortgage approval
- Gustan Cho Associates has no overlays
- We approval and close all borrowers with AUS Approval
- Our underwriters give thumbs up on all automated approvals and are ready to underwrite and close loans on time
- We used her current income of $12.00 per hour
- We needed to verify two-year employment history
- Since she had a 9-month gap in employment back in 2012, we needed to get a verification of employment dating back to 2011 from a previous employer
Everything checked out and we closed the mortgage loan on time.
College Graduates Without 2 Year Employment History
How Do Mortgage Lenders View Periods Of Unemployment With College Students:
I deal with many first time home buyers who are first time home buyers but lack the two-year employment history requirement.
- The good news is that as long as the home buyer has been a full-time student and just got a job, the two-year employment history is waived
The time the home buyer was a full-time student is counted the same as work experience.
Gaps In Employment Guidelines On 1099 Wage Earner Versus W-2 Earner
Borrowers who are 1099 wage earners need two years of employment as a 1099 wage earner to qualify.
- 1099 wage earners are considered self-employed borrowers
- Mortgage Guidelines state that for self-employed borrowers, 2 years of income taxes is required
- If a W-2 employee goes from a W-2 employee to a 1099 wage earner, that borrower needs two years of employment history as a 1099 wage earner to qualify for a mortgage
- However, if a 1099 wage earner goes to a W-2 wage earner, then the two year requirement is waived and this borrower can qualify right away
- 30 days of paycheck stubs and an offer employment offer letter is required to qualify
Gustan Cho Associates is a national lender with no overlays on government and conventional loans. We have no overlays with gaps in employment. Borrowers do not need to be in the same job for the past two years to qualify for a mortgage with us. Home Buyers and homeowners needing to qualify for a mortgage with a direct lender with no mortgage overlays on government and conventional loans, please contact us at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.
This BLOG On How Do Mortgage Lenders View Periods Of Unemployment Was UPDATED On January 18th, 2019
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