FHA Loan Qualifications

4 Replies

Hello, 

This is my first time posting in the forums. However, I have been researching methods, listening to podcasts and reading articles here on BiggerPockets. 

I am a recent college graduate with little capital and loan repayments starting soon. My plan is to get buy a small multifamily house in the Midwest or cheaper areas in Pennsylvania (Currently I live in Richmond, VA which is hard to find a deal) and rent the other units out. From my understanding, FHA Loans require a two year employment at the same company.

So here is my question, if I land a job in the Midwest that pays well and I could pay the mortgage even without renting the other side out, I would fail to qualify for the loan. Is there any way around two year employment or do I have to keep the same job for two years and then apply for the loan? Simply asking, do I just have to wait and then begin my real estate career? Thank you in advance. 

Typically, no, there aren't ways around the 2 year job history for FHA. Sometimes they can take 1 year of employment since you're coming straight from school, but you definitely need to hold some sort of relevant job.

However, there are banks who are doing conventional 3.5% down loans that have more flexibility.  Banks are loosening up again, so they're getting more creative.  Call every single bank your area and speak to every single one of them.  You may find someone who can help you out.

Good luck!

I just recently bought a house (close on July 31st) and we had to weigh the option of FHA or conventional. I only had 1 year of work and my girlfriend had 4 months so the two year rule I was unaware of.

My advise would be go talk to a mortgage broker, these people usually have a beat of what is available with your income employment and where you are living. For example you may even qualify for a USDA loan which is generally 0% down.

If you are looking in the Wisconsin area I recommending giving Educated Mortgage a call.

Exhaust every mortgage lender in the areas you are pursuing.... the 2 year rule may have lean way if you are coming directly out of college and if you've already found a property with tenants that produces positive cashflow. We did an FHA loan for our first multi-unit about 4 years ago and we believe it was the best start to our portfolio that we could have done (to be clear though, we did a 203(k) FHA loan).

@Alex Waite no you don't have to wait 2 years, either for FHA or Conventional, if you get a job in the field of your education, and there was not a 6-month gap between school graduation and the new job. And if that's the case, there is no waiting period. If there was a 6-month gap, then you would need 6 months at the new job.

And you can use W-2 base salary only to qualify within the first 2 years.  No overtime, no commission, no bonus, and no 1099/self-employment.  For those, you would need a 2 year history.

Hope that helps, best of luck!