Stability of Income

Income Stability

FHA underwriting guidelines do not put restrictions on the type of employment that a borrower has or on minimum length of time that they have held a position of employment.  However, FHA loans do require that a borrower has at least two years of employment history.  FHA allows that a borrower’s previous school or military experience satisfies the two year employment history requirement.

Regarding employment history, there are certain circumstances worth mentioning that may or may not preclude a borrower from qualifying for an FHA mortgage.  As such, when these circumstances are present, written explanatory documentation is required.

Employment Gaps: Employment gaps that are longer than a month must be explained in writing.

Frequent Job Changes: It is acceptable that a borrower frequently changes jobs in the same line of work as long as he or she continues to advance in income or benefits.  In these circumstances, income stability takes priority to job stability.

Recent Return to Work Force: If a borrower has recently returned to the work force after an extended absence, there income can be considered effective and stable if the borrower has been employed for six months or more and he or she can document a two-year history prior to the absence from the work force.