FHA typically requires a two year employment history, but job gaps are not an automatic deal killer. FHA guidelines are actually fairly flexible regarding job gaps. The job gap will need to be documented and certain conditions need to be met, but don't let a job gap keep you from buying a home.
Orange County FHA Borrowers Returning to Work After Job Gap
An Orange County FHA borrower's income may be considered effective and stable when recently returning to work after an extended absence if he or 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 a lender issued Verification of Employment or copies of W2's or paystubs.
An extended absence is considered to be more than six months. An Orange County FHA borrower may have been out of work a year, and if they're able to verify a two year work history prior to the beginning of their "gap", and have been on the new job for six months, they are ready to go.
Reasons for Job Gap
There are many reasons why someone may have been out of work for more than six months. For example, an acceptable situation includes individuals who took several years off from employment to raise children and then returned to the work force. Of course, lately it has not been unusual for a borrower to be laid off and then take several months or even more than a year to find a new job.
After a gap, it will be difficult to use income received beyond the "base" income. FHA underwriters typically need to see a 24 months average of overtime, bonuses, or commission income in order to use the additional income in calculating the debt to income ratios.
The first step in an Orange County FHA borrowers should take in the home buying process is talk with an experienced Orange County FHA Direct Loan Officer. An experienced FHA loan officer should be able to quickly answer questions and help in getting the Orange County home buyer PreApproved for an FHA loan.
Authored by Tim Storm, an Orange County, CA Loan Officer with 20 year experience– Please contact my office at Home Point Financial for more information about an Orange County, CA home loan. 949-829-1846.
Call our office today and see how we can help you and your family. 949-829-1846 | tstorm (at) ochomebuyerloans.com