Job Relocation Mortgage Guidelines For Out Of State Home Buyers

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About Job Relocation Mortgage Guidelines For Out Of State Home Buyers

Job Relocation Mortgage Guidelines state that borrowers can qualify for a mortgage with a new out of state job. This holds true with a job transfer as well as a brand new job with a new employer. Moving can be a stressful process especially when you are moving to a new area of the country. Many families find themselves upsizing or downsizing with a relocation. But what happens when you want to buy a home in the area you are moving to?  This can be an extremely frustrating situation to be in. Qualifying for a mortgage with the relocation can be difficult. Each loan program is different. In this blog, we will discuss conventional and FHA options. You may be transferred within your own company or starting a new job with a new company. We will go over both scenarios.

Job Relocation Mortgage Guidelines With Transferring Job With Same Company Out Of State

Out-of-state mortgage with work in the same company

Job Relocation Mortgage Guidelines For Out Of State Home Buyers who are moving but staying with the same employer: This is the easiest way because an underwriter can justify your future income in your new position with the employer. You will not have any gap of employment, making this process simple. Let’s be honest, many times you will be moving to a new company and moving to a new location simultaneously.

Job Relocation Mortgage Guidelines In Qualifying For Home Loan Out Of State

How to obtain a mortgage when moving and starting with a new company:

  • Documentation is key for this to work
  • Homebuyers will need to obtain an accepted offer letter signed by their employer
  • There are very specific rules from Fannie Mae on this documentation
  • If the lender is delivering the loan to the secondary market after you start employment, you will have the opportunity to send the lender your pay stub after closing
  • The lender must obtain a pay stub from you that includes information to support the income used to qualify for your mortgage
  • MUST correlate with the contract/offer letter
  • The pay stub will be updated to your loan file before the mortgage is delivered on the secondary market
  • But what happens when the lender delivers the loan to the secondary market prior to you starting your employment?

Fannie Mae Job Relocation Mortgage Guidelines For Out Of State Home Buyers

This is the more common approach, and documentation is required to complete the transaction this way per Fannie Mae. Fannie Mae will allow you to close on your mortgage prior to use starting employment.

However, there are a few conditions that apply:

  • Only allowed on purchase transactions
  • Must be a principal primary residence
  • Only allowed for one-unit properties
  • You may not be employed by a family member or by any party involved in the mortgage transaction
  • The borrower is qualified using only fixed based income (salary or hourly)
  • Your first day at new position must be within 90 days of the closing date on your new home

Importance Of Employment Offer Letter

Employment Offer Letter

If the items above fit your relocation, you must provide documentation that shows your offer letter or contract for future employment. This must clearly identify that you have accepted the offer. Must be signed by both parties, yourself and your new employer. The terms of your employment, including position, pay structure, and your start date must be CLEARLY OUTLINED. The offer may not have any contingencies prior to your start date. If there are any conditions that must be met prior to your employment, such as a background or drug screening, those items must be satisfied before you close on your loan. An underwriter will have to verify with your new employer that those contingencies have been satisfied with either verbal or written documentation. Depending on your type of employment this documentation may be pretty thorough.

For example, a union member who works in a field where there are a series of short-term job assignments may require documentation from the union of future contracts that you will be working on. Long story short, an underwriter must verify the stability of future income.

Please read this next section carefully, this will make or break your qualifications. The lender must be able to document liquid reserves required from the AUS (DU) Findings. This means financial reserves to cover principal, interest, taxes, insurance, and any homeowner’s association dues (PITIA) for the subject property for 6 months. OR document enough reserves to cover the timeframe between the end date of your current employment through the start date of your next employer, PLUS ONE MONTH.

The lender may use documented income to be received after the end date with the current employer and before the start date with the next employer only if those funds are not used for qualification. Meaning we can use the funds from your last paycheck from your current employer, if those funds are not already part of your qualification can be very confusing, it is best to reach out to the experts of Gustan Cho Associates. Please call Mike Gracz on 630-659-7644 or text us for a faster response. Or email us at [email protected] to go over this in more detail.

Importance Of Reserves

Reserves by borrowers show strength to lenders.

Below are case scenarios of reserves by borrowers:

Case Scenario I Of Example Of Reserves:

  • Principal and Interest – $1476
  • Taxes – $375
  • Insurance – $120
  • HOA – $60

Total PITIA Payment – $2031

6 Months Reserves = $12186

Case Scenario II

Example 2:

In this example, Brian will be ending his job on July 1st in Chicago and start a new job in Los Angeles on October 1st.

  • We will use the payments from above in this example
  • Since there are three full months between Brian ending his current employment and starting his new employment, you will need three months reserves plus one month of reserves
  • You always add an additional month per Fannie Mae guidelines
  • Brian would need a total of four months of reserves or $8,124

Fannie Mae HomeReady Mortgage Guidelines On Conventional Financing

The information above is for conventional financing. The great news is, you need as little as a 3% down payment for a conventional loan on a primary residence. You may use the above information with Fannie Mae programs such as the Home Ready.

With this program, there are many pockets available where there are no income limits:

Gustan Cho Associates specializes in the Fannie Mae HomeReady program. Please reach out to us for advice on how to utilize this program.

HUD Job Relocation Mortgage Guidelines

HUD Job Relocation Mortgage

Now, what about FHA Lending?

Unfortunately, per HUD guidelines, you must start your new employment and receive at least one paycheck stub before you close on your FHA loan. Meaning you will need to move and start your new employment prior to closing on your new home. This may require you to find short-term housing as part of your relocation. There are times where the seller will allow you to rent the house from them for a month or two before you purchase it, you will need to work that out with your realtor.

This is an area of mortgage lending that many loan officers do not take the time to educate themselves on. Might be because this is a situation that is something loan officers do not see on an everyday basis. But as you can see, Gustan Cho Associates are mortgage experts. Gustan Cho Associates is one of the very few national lenders with no overlays on government and conventional loans. Our licensed and support staff are available to help 7 days a week. Hope to hear from you if you need any clarification.