FHA Loan Proof of Employment

4 Replies

I have a question regarding providing proof of Employment when attempting to get an FHA loan.

I just relocated back to NJ from FL. From July 2017 to June 2019 I worked with the same company. From July 2017 to Dec 2018 I was 1099. Jan 2019 to June 2019 I was W2.

I am back in NJ to take a job in North Jersey in the same fiekd, however, I haven't worked since the middle of June as I am waiting to start in the middle of August at my new location.

So, will the lapse in time disqualify me from providing proof of two years working if I were to lets just say, apply one year from now? Also, because I was 1099 for those first 18-months, will that be a deterrent as well?

Thanks in advance!

@Dan Perlman , I’m pretty confident that you will not have a problem. 

“4155.1 4.D.1.c Analyzing a Borrower’s Employment Record
When analyzing the probability of continued employment, the lender must examine
 the borrower’s past employment record
 qualifications for the position
 previous training and education, and
 the employer’s confirmation of continued employment.
The underwriter should favorably consider a borrower for a mortgage if he/she changes jobs frequently within the same line of work, but continues to advance in income or benefits. In this analysis, income stability takes precedence over job stability.

A borrower’s income may be considered effective and stable when recently returning to work after an extended absence if he/she
 is employed in the current job for six months or longer, and
 can document a two year work history prior to an absence from employment
using
 traditional employment verifications, and/or  copies of W-2 forms or pay stubs.

Note: An acceptable employment situation includes an individual who took several years off from employment to raise children, then returned to the workforce.
Important: Employment situations not meeting the criteria listed above may only be considered as compensating factors. Extended absence is defined as six months.

4155.1 4.D.1.d Borrowers Returning to Work After Extended Absences”

Since, you have only been in between jobs due to relocation, you should not have a problem. To make it more solid, provide a copy of your employment offer with non-contingency language on it. Then by time you close, you will have a paystub already which your lender will probably ask of you. 

So, no biggie. You got this. Good luck. 

@Paul Defngin

Thanks for the answer. Puts me at ease. Last question if you don't mind.

If I have two tradelines and a potential lender requires 3, can I use something such as a gym membership to provide proof of constant oay history if it is for an FHA loan?

@Dan Perlman , that will depend really on that lender but it's not necessary that you have 3 trade lines. If it is, that would be an overlay for that lender unless it's because your loan is being manually underwritten. For the most part, if you have a credit score and your loan officer submitted your loan through desktop underwriting or loan prospecting (automated programs used by originators to qualify a borrower through Fannie Mae and Freddie Mac guidelines for conventional loans or FHA loans), and received an approve/eligible, then you should be ok with just the two trade lines.

That said, maybe, there is some specificity of your situation that only your loan officer may know of that I don’t know. So take this as a general suggestion but definitely ask your loan officer for specific reasons why they’re requiring the 3 trade lines. 

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