FHA Guidelines for Stability of Income:
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
Allowances can be made for seasonal employment, typical for the building trades and agriculture, if documented by the lender.
When analyzing the probability of continued employment, the lender must
the borrower’s past employment record
qualifications for the position
previous training and education, and
the employer’s confirmation of continued employment.
The underwriter should favorably consider a borrower for a mortgage if he/she changes jobs frequently within the same line of work, but continues to advance in income or benefits. In this analysis, income stability takes
precedence over job stability.
A borrower’s income may be considered effective and stable when recently returning to work after an extended absence if he/she is employed in the current job for six months or longer, and can document a two year work history prior to an absence from employment using traditional employment verification's, and/or copies of W-2 forms or pay stubs.
Note: An acceptable employment situation includes an individual who took several years off from employment to raise children, then returned to the workforce.
Important: Employment situations not meeting the criteria listed above may only be considered as compensating factors. Extended absence is defined as six months.
Always positive information, never negative, always on time and keeping you informed on what’s new in the processing and underwriting of your mortgage loan application.
Robert B. Summers
Senior Client Services Admin
Southwest Funding, LP Branch 777
Indianapolis, IN 46202
All information provided is that of the author and not that of Southwest Funding, LP.