In one of the latest updates to our guidelines, Fannie and Freddie will allow someone that has a job offer and a position that will start within 90 days for Fannie and 60 days for Freddie of funding to use that future income to qualify for a loan. This is great news for people that are relocating or taking time off between positions. You cannot use income from a future raise, just a new job.
Here is an overview of the new policy.
- Allowed for Fannie per DU Findings with the following requirements:
o 1 Unit property only
o Purchase Transactions only
o Primary Residence only
o The borrower Is not employed by a family member or by an interested party to the transaction, AND The borrower is qualified using only fixed base income
o The borrower’ start date must be within 90 days of the note date
o The contract for future employment must:
- Clearly identify the employer and the borrower, be signed by the employer and be accepted and signed by the borrower
- must clearly identify the terms of employment, including position, type, and rate of pay and start date, and
- must be non-contingent. If conditions of employment exist, all conditions must be satisfied prior to closing by verbal verification or written documentation. This confirmation must be noted in the file.
o In addition to the amount of reserves required by DU or for the transaction type, one of the following is required:
o Sufficient PITIA for the subject property for six months, OR
o Sufficient PITIA for the subject property for the number of months between the note date and the employment start date, plus ONE.
- Freddie LP guidelines have been updated with the following:
o Income from future salary increase is no longer permitted to be used for qualifying
o For income received from future primary employment, the time frame between the Mortgage Note Date and the commencement of employment (the employment gap) must not exceed 60 days