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Qualifying After Returning to Work

due to COVID-19 pandemic a woman sits at home working at her computer researching job-seasoning requirements for the mortgage industryMany people are wondering how soon laid off and furloughed borrowers will qualify for mortgage financing once they return to work.

EMPLOYMENT GAP UNDER SIX MONTHS

If the layoff or furlough lasts less than six months, lenders will be able to fund most loans as soon as borrowers return to work (for conforming, FHA and VA loans).

Some jumbo lenders, however, may require 30 days of job-seasoning before they will fund.

EMPLOYMENT GAP OVER SIX MONTHS – RETURNING TO SAME JOB/SAME INDUSTRY

If a layoff lasts more than six months, things get more complicated.

If borrowers return to the same job or a similar job in the same industry, they will be able to qualify for conforming (Fannie/Freddie) financing 30 days after they return to work, in most cases, with 30 days worth of paystubs.

FHA and jumbo borrowers may require six months of job-seasoning, however.

NEW JOB/NEW INDUSTRY

If laid off borrowers find new jobs in new industries, they will have to “season” their new jobs for six months in most cases (and up to two years in some cases) before they will qualify for any type of loan.

The exception to this rule is for borrowers who recently graduated from college or any type of professional, training, or graduate program that relates to the borrower’s field in some way.

Recent grads can usually qualify for financing as soon as 30 days after starting a new job.

TEXAS = MORE THAN OIL & GAS

Oil and gas represent only about 9% of the Texas economy nowadays. I point this out because the entire petroleum industry is getting killed right now by extremely low prices and massive supply gluts.

In the 1980s, oil and gas so dominated the Texas economy that when prices tanked, the entire state (banking, real estate, professional services) went down with it – in one of the biggest economic collapses the world had ever seen.

But today fortunately, Texas is far more diversified and resilient – with vibrant tech, education, manufacturing, and financial service industries.

I thought this was a great reminder for all of our Texas clients who might be worried by all the “gloom and doom” stories they are seeing in the press.

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Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167

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