Why a 6 Month job gap on your FHA Mortgage could be an issue

If you are buying or refinancing a home and you’re getting an FHA Mortgage and you’ve had a job in the last six months, this information is going to be particularly important as relates to getting a home loan.  The following is what you need to know…

If you are getting an FHA mortgage loan to purchase a refinance a home and you had a job gap in the last six months are so, you might have a challenge with your loan.  The Federal Housing Administration added another layer of guidelines for documenting job history. The guideline states if you have had a job gap of more than six months you need to provide an additional two years of the previous income history.

Here’s where this can be considerably challenging.  Most mortgage loan applications require a two-year job history to have stability for your income when it comes to getting a mortgage loan. Well,  so, for example, let’s say you had a job for the most recent last 1.5 years but then you had a job gap of more than six months. Now you need to provide an additional two years of work history. It can become murky if you change jobs multiple times or work for a company that is no longer in existence.

Simply put, for every six months of a job gap you must have an additional two years of employment.  The good news however is if you were previously in school for example full time you were standing in the field in which are now working good news is transcripts can be used to provide in lieu of income documentation i.e. pay stubs, W2s etc.  This is particularly beneficial for first-time home buyers who are graduating college they have a job history via being a full-time student.  FHA remains the most flexible loan for now only first-time home buyers also move-up buyers who have unique financial situations, have less than perfect credit, or have little to no down payment..  This loan also allows for a 6% seller credit for closing costs when purchasing a home which can be particularly important for those who have very little cash to work with when getting their foot in the door to buy a home.

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