FHA Employment Guidelines
FHA, or the Federal Housing Administration, is the largest mortgage insurer in the United States and offers loan programs for borrowers seeking more flexible terms. There are specific employment guidelines for people seeking an FHA loan.
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Guidelines
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The key to employment qualification for an FHA loan is job or career consistency for the two years prior to application. When applying for an FHA loan, you will need to prove your employment and salary history with documentation directly from your employer. The lender may also seek validation that your employment is expected to continue. These standards will also apply to any co-borrower on the loan.
Income
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The lender servicing your FHA loan will seek income verification information. There is no minimum income for approval for an FHA loan. The lender will attempt to verify that your employment will continue into the next three years. If the lender becomes concerned that your employment situation could change, the loan may not be approved. While there are no specific income requirements, your monthly loan payment should fall no higher than between 31 percent to 43 percent of your monthly income.
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Self-Employed Borrowers
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If you are self-employed and have a 25 percent or more ownership in a business, there are special considerations to qualify for an FHA loan. You need to prove that you successfully worked in the same field as your current business for the two years prior to your application. One year of experience and one year in college or training will also suffice. You will need to provide profit and loss information and business and personal tax information for your self-employment for the past two years.
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References
- U.S. Department of Housing and Urban Development
- FHA Outreach: What are the basic eligibility requirements for FHA financing?
- FHA Outreach:How is income from self-employment calculated?
- FHA Outreach: What are the allowable debt to income ratios for an FHA loan?
- U.S. Department of Housing and Urban Development: FHA TOTAL Scorecard User Guide
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