One of the most important factors in getting qualified for a residential mortgage loan is your income and your employment history. Cash income is non existent and does not count in mortgage qualification. Self employed income requires a minimum of a two year history of tax returns and the lower of the two year’s gross adjusted income is taken into account for income qualification. For W-2 employees, Fannie Mae and FHA mortgage lending guidelines require six months on the job as a full time employee if the borrower has been laid off or off work for more than six months and a verification of employment from the emloyer that the borrower will have continued employment for the immediate and distant future. There is no job longevity period per Fannie Mae or FHA mortgage lending guidelines if the borrower has been unemployed or out of work for less than six months. A mortgage loan borrower can be unemployed for five months and get a new full time job and still qualify for a mortgage loan as long as he or she can provide 30 days pay check stubs.
Two Year Employment History
Many mortgage loan borrowers get confused when mortgage lenders ask for a two year employment history. Two year employment history means a two year work history excluding periods of unemployment. Being unemployed for over a year is fine and as long as you have a full time job currently but have a two year work history, you can still qualify for a residential mortgage loan. As mentioned earlier, if you have been unemployed or out of work for more than six months, you need to prove that you have been employed six months as a full time employee for at least six months. During the two year period, you can also have mutliple jobs. Two year employment history just merely means that you prove that you have a two year work history.
Lender Overlays With Employment And Income Qualification
Fannie Mae and FHA mortgage lending guidelines state that as long as you are currently employed full time and have been off work less than six months, you qualify for a residential mortgage loan. It also states that if you have been unemployed more than six months, you can qualify for a residential mortgage loan as long as you have been a full time employee for at least six months. However, each individual mortgage might have their own internal overlays and they might implement their own rules that overrides Fannie Mae and FHA mortgage lending guidelines. You need to seek a mortgage lender that have no internal overlays on this issue if this is an issue that might affect you.
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