January 7, 2014
A reader asks, “I currently live in Florida and want to purchase a home in Las Vegas, Nevada because I want to relocate there. I don’t have two years consistent work history, I might have 6 or 7 months of unemployment. My credit score meets the requirement. I want to know, will the gap in my work history affect my chances of getting approved? Also can I qualify in Florida and purchase a home in Vegas while still living in Florida?”
The answer to this question requires us to look up FHA loan rules for employment, income, and gaps in employment. These rules are found in HUD 4155.1, Chapter One, Section B, which says:
“The lender must obtain the most recent pay stub showing year-to-date earnings of at least one month, and one of the following to verify current employment:
• a written VOE verbal verification of employment, or
• electronic verification acceptable to FHA.”
In general, FHA loan rules say that gaps in employment of six months or less require no explanation. That said, let’s examine what Chapter One Section B says about employment history overall:
“The lender is required to verify the applicant’s employment history for the previous two years. However, direct verification is not required if all of the following conditions are met:
- the current employer confirms a two-year employment history (this may include a pay stub indicating a hiring date)
- the lender only uses base pay (no overtime or bonus pay) to qualify the borrower and
- the borrower signs Form IRS 4506 or Form IRS 8821 for the previous two tax years.”
In cases where the borrower was not with the same company or the same employer for the last two years, and the requirements listed above cannot be satisfied, Chapter One says, “the lender must verify the most recent two years of employment history by obtaining
• copies of W-2s
• written VOEs, or
• electronic verification acceptable to FHA.”
When it comes to qualifying in one state and purchasing in another, the lender’s requirements may play a role, but regardless, FHA loan rules do require the borrower to certify occupancy for the new purchase–the home must be bought for the borrower’s own personal occupancy.
These are FHA loan rules–the lender’s standards would also apply. Borrowers should know that a lender may have additional requirements above and beyond FHA loan rule minimums.
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.
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