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Returning To Work After COVID Layoffs; Job Seasoning

A young man sits on a rooftop after returning to work from a COVID layoff and uses a laptop.

One of our clients just returned to work after a six-month-layoff and her agent asked if and when she could qualify for mortgage financing.

In light of that, I thought I’d repeat this blog from April:

EMPLOYMENT GAP UNDER SIX MONTHS

If the layoff or furlough lasted 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.

SELF-EMPLOYED BORROWERS

Self-employed borrowers do not need to “season” anything, as long as they have been in business for over two years – in most cases. BUT, they do need to prove that their business is still viable in a post-COVID world with bank statements (showing strong deposits), profit and loss statements, and/or CPA letters. A restaurant owner, for example, could have had his best year ever in 2019, but that will do no good this year unless he can prove he is still thriving. For more info in regard to this, I encourage readers to see this blog from June called “Loans Just Got Tougher For The Self-Employed.”

RECENT COLLEGE GRADS

Borrowers fresh out of college often only need a valid offer letter and 30 days of job seasoning (paystubs) before they can use their income to qualify.

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

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