Job Gaps and Mortgage Approval in Kentucky (FHA & Conventional Guidelines)
Employment gaps happen, and they don’t automatically disqualify a borrower from getting a mortgage. Both FHA and Fannie Mae Conventional loans have clear guidance on how lenders handle gaps in work history, expected income, and frequent job changes. This long-form Kentucky-focused guide breaks everything down so you can understand exactly how lenders evaluate your employment profile.
What Counts as a Job Gap for Mortgage Underwriting?
A borrower is considered to have a job gap when they have six months or more with no verified employment. Each loan program handles this differently, so documentation and expectations vary.
Fannie Mae Conventional Guidelines for Job Gaps
Fannie Mae does not impose a hard rule on employment gaps. Instead, the primary requirement is that Desktop Underwriter (DU) accepts the borrower’s employment and income documentation.
Most lenders verify:
- Your most recent paystub
- Your most recent W-2
If DU accepts the income, a prior gap usually does not impact approval.
Learn more about Kentucky Conventional Loans: Kentucky Conventional Mortgage Loan Guide
Kentucky FHA Loan Guidelines for Job Gaps
FHA requires two conditions to be met if a borrower has been unemployed for six months or more:
- You must be back on the job for at least 6 months at the time of FHA case number assignment.
- You must document a two-year work history prior to the gap.
If those are met, FHA generally considers the income stable enough for qualifying.
More FHA resources: Kentucky FHA Mortgage Guidelines
Using Income From a Job That Has Not Started Yet
FHA allows lenders to use expected income if the income will begin within 60 days of closing. This may include:
- A new job start
- A scheduled raise or promotion
- A cost-of-living adjustment (COLA)
- Starting pension or retirement income
The employer must verify the income in writing and confirm it is guaranteed to begin on a specific date.
Borrowers must also have enough reserves or income to make the mortgage payment until the new income begins.
HUD 4000.1 Reference: II.A.4.c.xii.(L)
How FHA Evaluates Frequent Job Changes
If a borrower has changed jobs more than three times in the last 12 months or switched industries, FHA requires additional documentation.
Lenders must obtain either:
- Training or education transcripts showing the borrower is qualified for the new job, or
- Proof of consistent increases in income or benefits
HUD 4000.1 Reference: II.A.4.c.xi.(A)
More on work history rules: Kentucky Work History Requirements for Mortgage Approval
Key Takeaways for Kentucky Borrowers With Job Gaps
- Conventional loans are flexible — DU findings drive approval.
- FHA requires six months back on the job after a gap plus a prior two-year history.
- Expected income can be used if employment begins within 60 days of closing.
- Frequent job changes may require additional documentation.
- Strong AUS (DU or FHA TOTAL) findings can offset prior employment instability.
Have Job Gaps? I Can Help You Navigate the Guidelines.
If you’ve had a job gap or recent job changes and want to understand how this affects your FHA or Conventional approval, reach out and I’ll walk you through your options.
Joel Lobb – Mortgage Loan Officer (NMLS #57916)
Email: kentuckyloan@gmail.com
Call/Text: 502-905-3708
Serving all of Kentucky FHA, VA, USDA, KHC, and Conventional Homebuyers
