A reader asks, “if one party has a temp position to perm and there is a letter from temp staff stating that she will be hired full time at the end of the 6 month probation period by the company she is working for can we be eligible for a fha loan or will it get denied?”
FHA loan rules for verifying employment and income from that employment are found in HUD 4155.1 Chapter Four, Section D, which states in part:
“To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held a position of employment. However, the lender must verify the borrowers employment for the most recent two full years, and the borrower must:
–explain any gaps in employment that span one or more months, and
–indicate if he/she was in school or the military during the most recent two full years, providing evidence supporting this claim, such as college transcripts, or discharge papers.”
Temp work is, as you can see from the above, not covered in that portion of the loan rules for employment verification. However, assuming the lender is willing to work with the borrower under these circumstances, the same burden of proof would be on the lender to determine if the employment/income is steady and likely to continue. From Chapter Four:
“When analyzing the probability of continued employment, the lender must examine:
–the borrowers past employment record
–qualifications for the position
–previous training and education, and
–the employers confirmation of continued employment.
The underwriter should favorably consider a borrower for a mortgage if he/she changes jobs frequently within the same line of work, but continues to advance in income or benefits. In this analysis, income stability takes precedence over job stability.”
There are many variables that could factor into a situation like this, including whether or not the borrower is the only person financially obligated on the loan, state laws, and the nature of the employment. These situations would be handled by participating FHA lenders on a case-by-case basis.
Do you have questions about FHA home loans? Ask us in the comments section. All comments are held for review.