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FHA loans are one of the best options for young, first-time home buyers who have not had as much time to save for a large down payment or establish a high credit score.

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Employment Requirements for FHA Loans


Employment Requirements for FHA Loans
FHA loans are popular for their low down payment requirements and more lenient credit score guidelines. To qualify for an FHA loan, you must meet certain employment requirements. In this article, we'll dig into the FHA loan employment requirements so that you can understand what's needed to get approved for this type of mortgage.

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.
Creditworthiness

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.
Meeting the FHA loan employment requirements is an essential step in securing one of these home loans. You'll need to verify a steady income with a two-year employment history, a credit score that meets the lender's requirements, and the ability to provide documentation for these things.
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Steps to Take if Your Appraisal Comes in Low

House hunters sometimes face a curveball when the appraisal for a home they want to buy with an FHA mortgage is lower than the offer. Is this a deal-breaker? Believe it or not, it isn't the end of the road. A low appraisal can sometimes be just a bump in the road. In other cases, you may wish to walk away from the deal. Here's your game plan to navigate this situation...

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