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FHA Job Gap & History of Employment
Question:
Our client had a job gap and is back to work. They have been consistently employed for 6 months, but this is with two different employers. Will FHA allow this in order to use their income, or do they need to be at the same employer during those 6 months?
Answer:
Last year, FHA changed the Employment Gap guideline to clarify that the borrower must be “employed in the current line of work” as opposed to “in the current job.” This was to allow for more than one employer during the six-month period. (See the guideline below.) Make sure that you can verify a solid two-year history prior to the gap, which is the second part of this requirement.
Reference:
4000.1(B) Addressing Gaps in Employment
For Borrowers with gaps in employment of six months or more (an extended absence), the Mortgagee may consider the Borrower’s current income as Effective Income if it can verify and document that:
- the Borrower has been employed in the current line of work for at least six months at the time of case number assignment; and
- a two-year work history prior to the absence from employment using standard or alternative employment verification.
Subscribers can access the Income Analyzer – Gaps in Employment – All Agency Comparison chart under our “Income Analyzers” page.