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
October 31, 2024When buying a home for the first time, it helps to know how long the process can take. How do you know if your appraisal report is delayed if you don’t know how long the FHA allows for the process to be completed? How long does it take to get from the final offer to closing day? A “typical” FHA loan process may take up to 45 days from start to finish. Several factors can influence this timeline.
October 30, 2024Just because an FHA loan is designed to be more lenient with FICO scores and require a lower down payment doesn’t mean the house you buy with that loan is less than ideal. Did you know that FHA loans have minimum property standards to ensure the home is safe and livable? Those standards require the home to have an “economic life” for the entire term of the loan so you can freely sell the property later on if you choose to do so.
October 29, 2024Buying a home with an FHA mortgage is a major life decision, and preparation is essential before you start house hunting or consider making an offer on a property.
How to get started? In the early stages, establishing your budget and how much work you need to do on your credit is key. But once you have gotten past the initial phase of that planning you’ll want to consider the house itself and what you want from it.
October 25, 2024Mixed-use properties combine residential and commercial spaces. Some borrowers applying for FHA home loans want to know if purchasing such a property using an FHA single-family home loan is possible. The FHA does allow the use of its loans for mixed-use properties, but certain conditions must be met.
October 24, 2024Buying your first home is a major milestone. If you use an FHA mortgage to buy your home, you’ll have two types of insurance to consider. One type is the FHA-required mortgage insurance premium, which is paid for 11 years or the loan's lifetime, depending on your down payment, loan term, and other variables.
