Mortgage With Employment Gaps With a New Job
This blog will cover how to get a mortgage with employment gaps with a new job. In general, lenders will require a two-year employment history.
Many borrowers assume if you are not employed with the same company for the past two years you will not qualify for a mortgage. This is not the case.
We will cover how to get a mortgage with employment gaps in the past two years. You can have multiple jobs or have been unemployed in the past two years and qualify for a mortgage. In the following paragraphs, we will cover how to get a mortgage with employment gaps in the past two years and its guidelines.
How To Get a Mortgage With Employment Gaps
Credit and income are the two most important factors lenders base their mortgage approval decisions on
. A borrower’s credit and credit scores show their financial responsibility and habits. Income is based on qualified income. Cash income or undocumented income does not count as qualified income in mortgages.
Heavy emphasis is based on employment and the ability to repay. The borrower’s employment history and the borrower’s stability probability on how likely the borrower will be employed in their current position for the next three years are crucial. You do not have to be on the same job for the past two years to qualify and get pre-approved for a mortgage.
How Much Money Do I Need To Buy a House?
Government and conventional loans have minimum down payment requirements. The down payment requirements depend on the individual mortgage loan program. VA and USDA loans do not require a down payment. Lenders will lend 100% loan to value on VA and USDA loans. However, all home purchase transactions come with closing costs.
Closing costs vary depending on the property, city, state, and other factors. To qualify for a mortgage for a first-time home buyer with little down payment and bad credit is not as difficult as it may seem.
The minimum credit score required for a 3.5% down payment FHA loan is 580 FICO. Homebuyers do not need any closing costs besides the down payment. This is because HUD Guidelines on Seller Concessions allow up to 6% seller concessions by sellers to pay for home buyers closing costs.
How Much Down Payment and Closing Costs Do I Need For a Home Purchase?
There is a down payment and closing costs on every home purchase transaction. If there is a shortage of closing costs, the lender can give lenders credit for closing costs to borrowers. To qualify for a mortgage for a first-time home buyer, a person must show proof of income for the past two years. It has to be verifiable income. Borrowers need to provide a two-year residential history.
Mortgage Loans For Recent College Graduates
For first-time home buyers who do not have two years of work experience, if they have gaps in employment due to schooling. College, training vocational schools, and specialty schools like beauty schools can be used as a substitute for work experience.
You can have a gap in employment and qualify for a mortgage. Many working adults may take a break to go back to school to train for a new career. Many take a year or two off to go back to vocational schools to become plumbers, beauty school, electrical technician school, police and fire academies, and dental assistant schools and get nice job offers. You do not need two years on your new job to qualify for a mortgage.
Need to provide college and trade school transcripts. Borrowers who work as a waiter or waitresses, get cash tips, and do not declare it on income taxes cannot use cash income to qualify for a home loan for a first-time home buyer. Need documented income. FHA Bad Credit Lenders have no income verification mortgage programs.
Qualifying For a Home Loan With Bad Credit
First-time home buyers can qualify for FHA loans with bad credit. Outstanding collection and charge-off accounts do not have to be paid off. FHA does require timely payments in the past 12 months. HUD allows the borrower to qualify with prior bankruptcy and foreclosures. The two-year waiting period after the Chapter 7 Bankruptcy discharge date to qualify for FHA loans.
How Soon After Filing Chapter 13 Bankruptcy Can I Get FHA Loan
Homebuyers can qualify for FHA loans one year into a Chapter 13 Bankruptcy Repayment Plan. Need approval of Chapter 13 Bankruptcy Trustee.
There is no waiting period after the Chapter 13 Bankruptcy discharge date to qualify for FHA loans. HUD requires a three-year waiting period after the recorded date of foreclosure, deed in lieu of foreclosure, and short sale to qualify. HUD allows non-occupant co-borrowers to qualify for a mortgage for a first-time home buyer.
The bankruptcy does not have to be discharged to qualify for FHA loans. You can qualify for a purchase and refinance FHA loan while you are in Chapter 13 Bankruptcy repayment plan. There is no waiting period to qualify for an FHA loan after Bankruptcy discharge date.
Qualified Income To Qualify For A Mortgage
Homebuyers need qualified income to qualify for a mortgage for a first-time home buyer. FHA Loans are the best mortgage loan programs for first-time home buyers. Homebuyers need to have full-time jobs with documented income. Income can be salary or hourly. Applicants with consistent overtime time and overtime income for the past two years can use both full-time hourly income and overtime income to qualify for a mortgage. The past two years’ overtime income will be averaged. For example, here is a case scenario:
- If the borrower had overtime income for 2011 was $8,000
- and for 2012, it was $9,000
- the income we will use for mortgage qualification will be $9,000
- which is the average of the two years of overtime
Most borrowers make the same annual income for two years. But if one year is higher than the other, we average the two years of annual full-time income. Or we take the lower of the two years annual full-time income.
Credit Tradelines Needed To Qualify For a Mortgage
To qualify for a mortgage for a first-time home buyer, most mortgage lenders want to see that the mortgage loan borrower has at least three credit tradelines and that those credit tradelines payments have been paid on time for the past twelve months.
Credit tradelines include credit cards, student loans, auto payments, and other installment loans. We can use nontraditional to have the three traditional credit tradelines.
Examples of nontraditional credit are rent payments, cable payments, and cellular phone payments. It is important that whenever people pay their bills like rent payments pay them by check.
Verification of Rent Guidelines For Mortgage
Verification of rent is only valid with canceled checks or bank statements. Documented canceled check rental payments are important because a mortgage underwriter will request canceled checks as proof of payment. This is if they use nontraditional credit to qualify for a mortgage for a first-time home buyer.
A credit check will be used to qualify a mortgage loan borrower and see if home buyers meet the minimum credit score requirements. Credit scores are extremely important; having a good credit score will qualify you for a better mortgage. The Team at FHA Bad Credit Lenders are experts in helping first-time home buyers with bad credit or little to no credit qualify for FHA loans.
To qualify, don’t hesitate to contact us at FHA Bad Credit Lenders at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are available seven days a week, evenings, weekends, and holidays to take your mortgage inquiry and qualify and issue pre-approvals on home buyers.
