Fannie Mae – Employment History – Less Than Two Years

Question:

Fannie Mae recently changed its income guidelines, and I’m trying to figure out how it evaluates less than 24 months of employment history to assess employment stability. Can you share some examples?

Answer:

Fannie Mae States the Following:

Examples of acceptable factors may include:

Related Education or Training: The completion of a certificate, education, or other similar program for a borrower to gain the expertise to perform their current work-related requirements is an acceptable justification for stable employment. This must be documented and included in the loan file. Return From an Extended Absence: Borrowers who have been absent from the workforce for an extended period and have returned to work within the last 12 months must have their income and employment carefully evaluated to ensure it will continue. Examples of acceptable reasons for an extended absence may include borrowers who were previously homemakers or borrowers who retired and are now returning to the workforce. When using income from these borrowers to qualify, lenders should consider: the circumstances that enabled the borrower to return to work, how long the borrower has been back to work, the borrower’s employment history in the same or a related line of work; and the borrower’s Active Duty Military status.

What It Was:

Prior guidance used the two-year employment history as a bright-line rule. Recent graduates, career changers, and returning workers were often disqualified because they didn’t have two years’ history. Underwriters had limited tools to override the rule, even when circumstances supported stability.

What It Is Now:

Fannie Mae now provides explicit factors that support stability despite a short employment history. Education/training and return from extended absence are highlighted, but the list is not exhaustive (“examples…may include”). This is principle-based but helpful.

Impact:

Positive. This opens qualification paths for recent graduates with relevant degrees/certifications, career changers with credible training, and returning workers (parents re-entering the workforce, military veterans transitioning to civilian roles, retirees returning). The guidance is not a guarantee underwriters still must evaluate, but it provides a framework rather than an automatic “no.”

Real-Life Examples:

Likely Acceptable (Recent Graduate): Borrower graduated 8 months ago with a degree in Software Engineering and is employed as a Software Developer at a credible tech company, earning $75K. Only 8 months of employment, but the degree and job alignment directly support the expectation that employment will continue. The underwriter includes the income if the employment contract/letter confirms a permanent role.

Likely Acceptable (Parent Returning to Workforce): Single mother was a homemaker for 5 years. She returned to work 6 months ago as an office manager, earning $50K. Prior to her homemaking years, she worked in office administration for 10 years. She provides a resume showing her work history, a diploma/credential if applicable, and the employer’s confirmation of her current permanent role. The underwriter evaluates the continuity of her skill set and prior work history to support stability, despite only 6 months in the current role.

Likely Not Acceptable (Without Correction): Borrower completed a coding bootcamp 4 months ago and is now working as a junior developer on a contract basis (12-month contract with potential extension). Only 4 months of employment, bootcamp training is recent, AND employment is contract-based (time-limited). The underwriter is concerned about continuity beyond the 12-month contract. Unless the borrower can provide evidence of likely permanent conversion or an extended contract, the short history + contract nature make qualification risky.

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