Tuesday, August 14, 2018

Job Gaps in Employment and Getting Approved for a Mortgage Loan in Kentucky for FHA and Fannie Mae Conventional loans


Gaps in Employment and getting approved for a KY FHA and Conventional Mortgage Loan


  • A borrower who has no verifiable employment for 6 months or longer is deemed to have a gap in employment. 
  • Fannie:  Fannie does not address gaps in employment in their guidelines.  We must ensure that DU’s income documentation can be met.  This will typically require the borrower’s most recent paystub and a W-2 from the most recent year. 
  • FHA:  borrower must be employed at their current job for 6 months or more at the time of case number assignment and a 2 year work history prior to the gap can be documented.


Can income from employment that has not begun be considered effective income?


Expected income refers to income from cost-of-living adjustments, performance raises, a new job, or retirement that has not been, but will be received within 60 days of mortgage closing.  The Mortgagee must verify and document the existence and amount of expected income with the employer in writing and that it is guaranteed to begin within 60 days of mortgage closing.  Income is calculated in accordance with the standards for the type of income being received. The Mortgagee must also verify that the borrower will have sufficient income or cash reserves to support the mortgage payment and any other obligations between mortgage closing and the beginning of the receipt of the income.  

For additional information see Handbook 4000.1 II.A.4.c.xii.(L) or II.A.5.b.xii.(L) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh




How does FHA view borrowers who change jobs frequently?



If the borrower has changed jobs more than three times in the previous 12-month period, or has changed lines of work, the Mortgagee must take additional steps to verify and document the stability of the borrower’s employment income.
The Mortgagee must obtain:
• transcripts of training and education demonstrating qualification for a new position; or
• employment documentation evidencing continual increases in income and/or benefits. 

For additional information see Handbook 4000.1 II.A.4.c.xi.(A) or II.A.5.b.xi.(A) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh







How does FHA view borrowers who change jobs frequently?


If the borrower has changed jobs more than three times in the previous 12-month period, or has changed lines of work, the Mortgagee must take additional steps to verify and document the stability of the borrower’s employment income.
The Mortgagee must obtain:
• transcripts of training and education demonstrating qualification for a new position; or
• employment documentation evidencing continual increases in income and/or benefits. 

For additional information see Handbook 4000.1 II.A.4.c.xi.(A) or II.A.5.b.xi.(A) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh






Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
Company NMLS ID #1364
Text/call:      502-905-3708
fax:            502-327-9119
email:
          kentuckyloan@gmail.com
https://kentuckyloan.blogspot.com/









Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice


The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approvalnor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people.
NMLS ID# 57916, (www.nmlsconsumeraccess.org).