December 21, 2015
We get plenty of questions about FHA home loan rules about income, employment, and issues related to being a first time home buyer. Here’s one that came in recently:
“I purchased a condo in February 2012, and it was sold three years later,due to financial hardship. I started a new job November 30, 2015 in the same profession as my previous employment history as a customer service representative. Do I qualify as a first time homebuyer to apply for a FHA loan? Would I be required to be employed for at least six months on my new job?”
FHA loan rules focus on the borrower’s overall employment history. Here’s what’s written in HUD 4000.1:
“For all Employment related Income, the Mortgagee must verify the Borrowers most recent two years of employment and income, and document…”
FHA loan rules add:
“Direct verification of the Borrowers employment history for the previous two years is not required if all of the following conditions are met:
–The current employer confirms a two year employment history, or a paystub reflects a hiring date.
–Only base pay is used to qualify (no Overtime or Bonus Income).
–The Borrower executes IRS Form 4506, Request for Copy of Tax Return, IRS Form 4506-T, Request for Transcript of Tax Return, or IRS Form 8821, Tax Information Authorization, for the previous two tax years.”
In cases where the borrower has not been with the current employer very long, FHA loan rules instruct the lender:
“If the applicant has not been employed with the same employer for the previous two years and/or not all conditions immediately above can be met, then the Mortgagee must obtain one or a combination of the following for the most recent two years to verify the applicants employment history:
–W2
–Verification of Employment
–Electronic verification acceptable to FHA
–evidence supporting enrollment in school or the military during the most recent two full years”.
Borrowers should know that the FHA loan program does not favor or offer incentives to first time home buyers–any qualified applicant can get an FHA mortgage loan application, fill it out, and receive the same consideration regardless of whether a home has been owned in the past or not.
That does not mean that a participating FHA lender might not have some kind of first time home buyer incentive program, but the FHA single family loan program itself is not designed specifically for a first time home buyer.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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