Job History and Income Requirements for a Kentucky Mortgage Loan Approval

Mortgage Loan Work History Requirements

Understanding the work history requirements for different mortgage loan types can help streamline your application process.

Conventional Mortgage Loan Work History Requirements

Job History Required:

• 2 years of related work history is generally expected.
• If there are employment gaps, most lenders like to see at least 6 months at the current job.

Compensating Factors:

• If someone has less than 2 years total work history, it may still be acceptable if they can document relevant education or provide a letter of explanation about a recent job change.
  • Essentially, the borrower should show how their background (e.g., schooling or on-the-job training) supports their current position.

FHA Mortgage Loan Work History Requirements

Job History Required:

• 2 years of related work history is preferred.
• 6 months at the current job if there have been employment gaps in the recent past.

Compensating Factors:

• The FHA lender wants to feel confident the borrower is qualified for their current position and likely to continue in that job (or move into a better position).
  • It’s all about showing stability and a solid likelihood of ongoing employment.

VA Mortgage Loan Work History Requirements

Job History Required:

• 2 years or a combination of relevant schooling/training or military service to cover that two-year window.
• If the borrower is active military, they should be more than 12 months away from their release date.

Compensating Factors:

• The lender needs to verify the borrower has the necessary skills for the current job.
  • This could be demonstrated through a relevant degree, specialized training, or prior work experience.

USDA Mortgage Loan Work History Requirements

Job History Required:

• There’s no minimum time the borrower must be in the current position.
• However, they need to prove 2 years of work or related history overall.

Compensating Factors:

• It’s fine if the borrower has moved around between jobs, but they must explain any big gaps or changes.
• If the borrower spent time getting a degree or had a period of military service, they can document those periods (e.g., transcripts, discharge papers) to fill that two-year window.

Each loan program has its own guidelines, but they all circle back to the same main point: lenders want to see a stable or justifiable work history. Even if someone doesn’t have a full two years in one specific role, there are plenty of ways to show their background and explain any gaps—through education, training, military service, or simply providing a solid letter of explanation.

Remember, these requirements can also vary slightly depending on individual lender overlays (extra guidelines), so it never hurts to check with specific lenders. But in general, if someone can document a consistent timeline (or provide clear reasons if there are gaps), they’re on a good path for mortgage approval.

1 - 📅 Email - www.mylouisvillekentuckymortgage.com 

2.  📞 Call/Text - 502-905-3708

Joel Lobb

Mortgage Loan Officer - Expert on Kentucky Mortgage Loans

🌐 Website: www.mylouisvillekentuckymortgage.com

🏢 Address: 911 Barret Ave., Louisville, KY 40204

Evo Mortgage

Company NMLS# 1738461

Personal NMLS# 57916

For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

Kentucky Local Home Loan Lender Services

✅ First-Time Home Buyers Welcome

✅ FHA, Rural Housing (USDA), VA, and Kentucky Housing Corporation (KHC) Loans

✅ Conventional Loan Options Available

✅ Fast Local Decision-Making

✅ Experienced Guidance Through the Home Buying Process

Variable Income for A Mortgage Loan Approval in Kentucky

How to get approved for a Kentucky FHA, VA, USDA and Fannie Mae Mortgage loan with Variable Income 

 Variable INCOME if your borrower is not hourly at 40 hours a week or salary do you fall within VARIABLE INCOME?? Yup we all dislike that is calculated by an averaging method..

Examples of income of this type include income from hourly workers with fluctuating hours, or income that includes commissions, bonuses, or overtime.

History of Receipt: Two or more years of receipt of a particular type of variable income is recommended; however, variable income that has been received for 12 to 24 months may be considered as acceptable income, as long as the borrower’s loan application demonstrates that there are positive factors that reasonably offset the shorter income history.

Frequency of Payment: us as a lender must determine the frequency of the payment Examples:
If a borrower is paid an annual bonus on March 31st of each year, the amount of the March bonus should be divided by 12 to obtain an accurate calculation of the current monthly bonus amount.

Note that dividing the bonus received on March 31st by three months produces a much higher, INACCURATE monthly average.

If a borrower is paid overtime on a biweekly basis, the most recent paystub must be analyzed to determine that both the current overtime earnings for the period and the year-to-date overtime earnings are consistent and, if not, why.

There are legitimate reasons why these amounts may be inconsistent yet still eligible for use as qualifying income. For example, borrowers may have overtime income that is cyclical (transportation employees who operate snow plows in winter, package delivery service workers who work longer hours through the holidays).

We must investigate the difference between current period overtime and year-to-date earnings and document the analysis before using the income amount in the trending analysis.

Income Trending: After the monthly year-to-date income amount is calculated, it must be compared to prior years’ earnings using the borrower’s W-2’s or signed federal income tax returns (or a standard Verification of Employment completed by the employer or third-party employment verification vendor).

If the trend in the amount of income is stable or increasing, the income amount should be averaged.

 If the trend was declining, but has since stabilized and there is no reason to believe that the borrower will not continue to be employed at the current level, the current, lower amount of variable income must be used.

If the trend is declining, the income may not be stable.

Additional analysis must be conducted to determine if any variable income should be used, but in no instance may it be averaged over the period when the declination occurred.

Joel Lobb  Mortgage Loan Officer

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574
Get Approved Now Click Here

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people.
NMLS ID# 57916, (www.nmlsconsumeraccess.org).

Kentucky FHA Job Gap Guidelines Explained

Job History and Income Requirements

Kentucky Government Mortgage FHA

Question:

Can you help me understand how Kentucky Mortgage loans backed by FHA treats job gaps?

Answer:

A borrower must have a full 2-year history of employment/school/military service immediately prior to application. If there are any extended gaps within that 2-year period then the “Addressing Gaps in Employment” guideline is triggered, even if the gap did not occur immediately prior to the current job.

Reference:

FHA ML 2022-09 – this version has not yet been updated in the 4000.1 handbook , but must be used.

(B) Addressing Gaps in Employment

For Borrowers with gaps in employment of six months or more (an extended absence), the Mortgagee may consider the Borrower’s current income as Effective

Income if it can verify and document:

• that the Borrower has been employed in the current line of work for at least six months at the time of case number assignment; and
• a two-year work history prior to the absence from employment using standard or alternative employment verification.

Job Gap—The application will call for you to document your last two years of employment history. If you have had several jobs, or job gaps of more than 6 months, you will need to document why you were off work and why you made the changes in your job. The underwriter is looking for stability in your pay and job. If you were in school recently, then the underwrite may want to see transcripts to verify this.

Kentucky FHA Mortgage Program

The FHA Program does not technically have an minimum employment history requirement but lenders are required to verify applicants' employment history for the prior two years
Applicants are required to explain any employment gaps of at least one month
Explainable employment gaps of six months or more are also permitted

Self-employed borrowers are typically required to demonstrate a two year job history
A self-employed job history of between one and two years is permitted if the applicant was previously employed in a similar line of work for at least two years
A combination of one year of employment in a similar field plus one year of education or training in that field is also permitted for self-employed borrowers

An uninterrupted two year history of part-time employment is typically required although part-time work history of less than two years may be considered as long as the lender determines that the work is likely to continue
Income from seasonal employment is also permitted as long as the applicant has a two year work history and expects to be rehired for future seasons

A two year employment history is required for bonus, commission or overtime income to be considered
An employment history of less than two years is allowed if the lender justifies and documents the reason for including the income
Lenders are also required to explain any significant declines in bonus, commission or overtime income
Significant fluctuations in bonus, commission or overtime income may require the lender to use an average period of longer than two years to calculate the applicant's income