FHA Loan Employment Requirements & Exceptions

FHA loans are a popular type of mortgage, particularly with first-time homebuyers. They have low down payment requirements, low credit score standards, and flexible DTI requirements.

But there is a catch: To qualify, you’ll typically need to have at least two years of consistent employment. This shows the lender that you’ll have plenty of reliable income with which to make your payments and reduces the risk of loaning money to you.

Don’t fit this bill? There are some exceptions to the FHA’s employment requirements, so you may still qualify. Read on to learn more about how.

Exceptions to FHA Employment Requirements

FHA loans generally require a steady employment history, typically two consecutive years in the same field. However, the U.S. Department of Housing and Urban Development (HUD)—the federal agency that oversees the FHA loan program—recognizes that gaps in employment can happen. If you had a break of six months or more, you’ll need to show at least two years of stable employment before the gap and at least six months of re-employment afterward to meet FHA guidelines.

Here are some common reasons for employment gaps that may still be acceptable under FHA rules:

Active Duty Military Service

If you’re an active duty military servicemember, this may excuse you from the FHA’s employment requirements, particularly if you’ve been recently relocated or had a change of assignment.

To prove you qualify for this exception, you’ll need to provide documentation showing you’re on active duty, as well as any recent changes in station or assignment.

A quick note here: While FHA loans can be a good choice for military members, VA loans are specifically designed for them. They allow veterans and active duty servicemembers to buy a home easily and with no down payment. You may want to explore this type of loan before deciding on an FHA loan instead.

Newly Graduated Student

If you haven’t been employed for two years because you’ve recently graduated from school, this can exempt you from the FHA’s requirements as well. You will need to provide your transcript, diploma, or degree to prove you were in school in the recent past. You can usually request this from your school’s registrar or admissions office.

Raising Children

If you have employment gaps due to parenting (say, you took four months off when your child was born last year), you can typically still qualify, too. Usually, you’ll need to have been employed for at least two consistent years prior to the break and illustrate stable employment and income following the break.

You’ll need to prove your previous (pre-leave) employment and have your current workplace verify your employment. Recent paystubs are also required.

Medical Leave

Similarly, if you took a break from work for medical reasons, but have since returned to the workforce, you may still qualify. You’ll need to have been working for at least the last six months, though, and had two years of consistent employment prior to the leave. Again, employment verification is required here.

If you’re currently on disability or medical leave, you may also still qualify. You’ll need to prove that you intend to return to work — and that you still have a position to return to. You would also need to qualify for the mortgage based on your current income (which is likely reduced due to the medical leave).

FHA Self-Employment Requirements

Getting a mortgage when you’re self-employed is always a little more challenging than it is for borrowers with 9-to-5 jobs. That’s because you don’t have an employer to verify your work details, pay stubs to show your recent earnings, or W-2s to prove your annual income.

Instead, to prove you have the income and stability to get a mortgage, you’ll need to meet some other requirements, including having two years of consistent self-employment income documented on the most recent two years of tax returns. You’ll also need enough monthly income to cover your estimated mortgage payment. Things like certifications and degrees, profit and loss statements, and copies of client invoices may be required, too.

Can you get an FHA loan if you recently started a job?

The FHA requires two years of employment and or schooling to qualify for an FHA loan. As long as you were employed prior to your new job, you should be okay.

Can you get an FHA loan with income from cannabis/marijuana?

Income from employment in the cannabis industry is generally not accepted when applying for FHA loans. The Federal Housing Administration (FHA) requires that a borrower's income be legally derived under federal law. Since cannabis remains illegal at the federal level, earnings from this industry are typically considered ineligible for FHA loan qualification.

However, some conventional mortgage lenders may accept income from state-legalized cannabis employment, provided the borrower is a W-2 employee with no ownership stake in the business. Talk to a mortgage officer in your area for local guidance.