HUD Employment Guidelines To Qualify For FHA Home Loans

• However, each lender can have higher standards when it comes to income and employment
• The additional higher lending standards are called lender overlays
• Lender overlays are lending guidelines that are set by individual mortgage lenders that are above and beyond the minimum HUD Agency Mortgage Guidelines
• There are lenders like Gustan Cho Associates Mortgage Group that has no lender overlays
• Gustan Cho Associates just goes off the minimum HUD Agency Mortgage Guidelines

Importance Of Income And Employment When Qualifying For A Mortgage 

• The longer a borrower was with a particular employer without changing jobs, the safer the lender feels
• For example, lenders like to see a borrower who has been at the same job for the past ten years than a borrower who has hopped multiple jobs in the past two years
• Therefore, many lenders will require borrowers to have been on the same job for the past two years
• This is not a HUD 4000.1 FHA Guidelines but rather a lender overlay by the lender
• HUD Employment Guidelines are more lenient which we will cover in this article
• Gaps in employment in the past two years is allowed
• However, lenders may not allow this due to their lender overlays
• If you are told that you do not qualify for an FHA loan due to having multiple jobs in the past two years or having employment gaps in the past two years, look for a lender like Gustan Cho Associates that has no lender overlays

In this article, we will discuss the 2020 HUD Employment Guidelines To Qualify For FHA Home Loans.

HUD Employment Guidelines Versus Lender Overlays On FHA Loans

Not all mortgage companies have the same employment in the past two years of mortgage guidelines on FHA loans.

• Many lenders will require borrowers to have the same employer for the past two years
• This requirement is not HUD Guidelines
• It is the individual mortgage lender’s own requirement
• Borrowers applying for an FHA loan should research the basic HUD Guidelines before applying for an FHA loan
• All lenders need to meet the mandatory minimum HUD Guidelines
• However, lenders can have lending requirements that are above and beyond the minimum HUD Guidelines
• These higher lending requirements by the lender is called lender overlays
• Gustan Cho Associates Mortgage Group is one of the very few national lenders that do not have any lender overlays on government and conventional loans

Gustan Cho Associates will just go off the minimum HUD Guidelines and not require any other overlay beside the agency guidelines.

HUD Employment Guidelines On 2-Year Employment History

One of the common questions by borrowers is do you need to be on the same job for the past two years?

• The answer is NO
• Gaps in employment and multiple employment in the past two years are allowed when qualifying for FHA loans
• Many borrowers are told they need two years of employment history with the same job
• This is not correct
• A lender may require no employment gaps and the same employment in the same job for the past two years as part of their lender overlays
• Two years of employment history means an overall two years of employment history needs to be stated on the mortgage application
• Say a borrower was employed with the same employer for the past one year
• However, the borrower was unemployed for ten years prior to the current job

The borrower will need an additional one-year employment history prior to their employment gap. That completes the two-year employment history.

HUD Employment Guidelines On Employment Gaps