January 24, 2014
A reader asks, “Can a borrower get a FHA loan with less than two years of employment? She has a full time and part time job. However she has only been employed for 6 months on each job.”
Let’s examine what FHA loan rules say about this subject. FHA requirements for employment verification are found in HUD 4155.1. In Chapter One, Section B we learn:
“The lender is required to verify the applicant’s employment history for the previous two years. For the most recent two years the lender must obtain
• copies of W-2s
• written VOEs, or
• electronic verification acceptable to FHA.”
But what about in cases where employment can’t be verified for two years? And do the rules require the applicant to be on the job with the current employer for a certain amount of time? FHA loan rules in Chapter Four say there is no FHA minimum employment time for time spent in a particular job:
“To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held a position of employment. However, the lender must verify the borrower’s employment for the most recent two full years, and the borrower must
• explain any gaps in employment that span one or more months, and
• indicate if he/she was in school or the military during the most recent two
full years, providing evidence supporting this claim, such as − college transcripts, or
− discharge papers.
Allowances can be made for seasonal employment, typical for the building trades and agriculture, if documented by the lender.”
Borrowers who are on the job now will have their income examined to see if that income is “likely to continue”. It’s entirely possible that a borrower might not be viewed as a strong candidate for an FHA loan with less than one year of employment history, and lender standards may also apply.
It might be in a borrower’s best interest to wait until at least a year of total employment history can be documented. In cases where a borrower has had military experience prior to a civilian job, this may not be necessary (depending on the circumstances).
Do you have questions about FHA home loans? Ask us in the comments section. You can apply or get pre-approved for an FHA loan at FHA.com, a private company and not a government website.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
Browse by Date: