Employment Requirements for FHA Loans
July 15, 2023
Steady Income
- Employment History
Lenders will typically require at least a two-year employment history. This doesn't mean you have to work for the same employer for two years; it just means that you need to have a continuous employment record during that time. - Gaps in Employment
If you have gaps in your employment history, you may still qualify for an FHA loan, but the lender will want to understand the reasons for those gaps. Be prepared to provide an explanation, and it's helpful if the gaps were due to factors beyond your control, like a medical issue or the birth of a child. - Income Consistency
While having a steady job is crucial, so is having a consistent income. If your income fluctuates significantly or relies on bonuses, commissions, or self-employment, you may need to provide additional documentation to prove your ability to repay the loan.
It's important to note that while the FHA has minimum credit score requirements, individual lenders may set their own standards. It's possible to find lenders who are willing to work with borrowers with lower credit scores, but you may need to make a larger down payment or meet other compensating factors.
Verification of Income
- Pay Stubs
You'll need to provide recent pay stubs that show your year-to-date earnings. These pay stubs help lenders confirm your income. - Tax Returns
Lenders may also ask for your tax returns for the past two years. This is particularly important if you're self-employed or have income from sources other than traditional employment. - Employment Verification
Your lender may contact your current employer to verify your employment status and income. - Written Verification of Employment (VOE)
You might be required to provide a written VOE, which is a document from your employer that confirms your job, income, and other relevant employment details.
FHA Loan Articles
January 15, 2025Buying a condo with an FHA loan is an option some don’t consider initially, but it’s worth adding to your list of potential property types. FHA loans for condo units traditionally require condo projects to be on or added to the FHA-approved list. Still, changes in policy over the years allow borrowers to apply for FHA loans on condo units in projects not on the list on a case-by-case basis.
December 30, 2024When applying for an FHA loan, lenders will consider more than just your credit scores and history. They also look at other factors affecting your risk profile and the interest rate they offer you.
One factor is occupancy type. For FHA loans, this is straightforward because these loans require owner occupancy. Investment properties aren't eligible. While conventional loans may have different rates for primary residences, second homes, and investment properties, this isn't a concern with FHA loans.
December 18, 2024Did holiday spending get the better of you? Are you looking for ways to recover your spending plan as you search for a new home?
The holidays are a whirlwind of festivities, family gatherings, and gift-giving. But amidst the cheer, it's easy to lose track of spending. If you're aiming to buy a home in the near future, those extra expenses can have a bigger impact than you might realize, especially if you're considering an FHA loan.
December 17, 2024The Federal Housing Administration provides mortgage insurance on loans made by FHA-approved lenders, making homeownership more attainable for those who might not qualify for conventional loans.
While financial factors like credit score and debt-to-income ratio are key to loan approval, other non-financial aspects can also cause a denial.
December 11, 2024FHA loans, insured by the Federal Housing Administration, are a popular choice for many homebuyers, especially those who need a lower downpayment or more forgiving credit qualifying requirements. FHA loans are primarily intended for primary residences—homes that borrowers will occupy as their main dwelling.
