FHA Guidelines For College Graduates With No Work Experience
This Article Is About FHA Guidelines For College Graduates And High School Graduates With No Experience
One of the key requirements to qualify for a residential mortgage loan is to show a two-year work prior work history. This can be a problem for recent college graduates or high school graduates who just graduated from high school, college, or technical school. Many full-time students had no work history while studying full time. Might have gotten financial support via government student loans family, or odd and end temporary jobs. Some students, such as law school and medical school graduates have been unemployed for over 7 or 8 years and were professional students.
In this article, we will discuss and cover HUD Guidelines For Homebuyers With No Work Experience.
HUD Mortgage Guidelines On FHA Loans With Gaps In Employment
Others have taken time off work and went to school full time to learn a different trade such as the following:
- Automobile mechanics
- Dental technicians
- Nursing students
- Police Officer/Firefighters
- Or another new profession
FHA Guidelines For College Graduates With Changes Of Field Of Work
If someone changes their field of work, they normally need to take time off and go to school for certification. For example, a beautician needs over 2,000 hours of schooling to be eligible for certification. Same with police officers and firefighters where they need at least 480 or more hours of schooling which means four to six months of full-time training/schooling before entering their new workforce. Many full-time students land great-paying jobs in their field of studies after graduation. Unfortunately, many graduates have no work history, no established credit history. Some do not even have credit scores. I get many calls from recent college graduates who just started a new job in their field. They ask me when they can apply for a residential mortgage loan because they do not want to be a renter. The great news is that I can help recent graduates with no prior work history, no credit tradelines, and no credit scores.
FHA Guidelines For College Graduates With Zero Work Experience
Home Buyers who have just graduated from high school, college or technical school and have no work history that they can document can qualify for FHA Loans. The United States Department of Housing And Urban Development (HUD), which is the parent of the Federal Housing Administration (FHA), considers full-time schooling the same as work experience.
FHA Guidelines For College Graduates: Full Time Studies Is Equivalent To Two-Years Employment History
We offer mortgage loan programs for college graduates. As long as you can provide proof that you are working full time in your field of study, full-time college education history can be used the same as work history. We normally average the prior two years of tax returns or W2 income for income qualification. But since full-time students do not have prior earning histories, we will go off by their full-time job offer letter and most recent paycheck stub. We will probably require 30 days paycheck stubs. Also verification of employment from borrower’s current employer having them state that they are working full time and will continue to do so. The likelihood of continued full-time employment for the next three years is required. School transcripts will be required and used in lieu of the prior 2 years of employment history.
How About If Recent College Graduate Has No Credit Or Established Credit Tradelines
We can make an exception if the recent college graduate does not have a credit score or no established credit tradelines with our mortgage loan programs for recent graduates.
We can use non-traditional credit such as the following:
- Insurance payment
- School tuition payment
- Cellular phone bills
- Utility payments
- Other non-traditional credit from creditors that do not report to the three major credit reporting agencies
Using Non-Traditional Credit Versus Traditional Credit Tradelines For Borrowers With No Credit Scores
Many full-time students do not have any traditional credit tradelines. Therefore, many recent college graduates have no credit scores. HUD, the parent of FHA, allows borrowers to use non-traditional credit tradelines for borrowers with no credit scores. Non-traditional credit tradelines are creditors that do not report to the three credit bureaus. Examples of non-traditional credit tradelines are utilities, cell phone carriers, rent payments, tuition, dorm payments, insurance, medical, educational expense, and other creditors not reporting to credit bureaus. In order to be considered a tradeline, the borrower needs to have been paying on the non-traditional credit for the past 12 months.
How To Get A Credit Score For Borrowers Without A Credit Score
Those who have no credit scores due to lack of credit can easily get a credit score by getting one or two secured credit cards or adding themselves to their parent credit cards as an authorized user:
- Borrowers will get a credit score the next billing cycle.
- Make sure to only charge no more than 10% or less of the credit limit from new secured credit cards.
- Low credit card balances are a must to get the maximum credit score possible.
- If borrowers load up new secured credit cards to the credit limit, they will get a very low credit score, which is not what the purpose here is.
HUD Agency Mortgage Guidelines For Students And Recent Graduates Or Those In School and entering workforce does not require a two-year requirement. Home Buyers who are recent graduates and want to qualify for an FHA Loan with a lender with no overlays, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates is a mortgage banker, correspondent lender, and has the ability to broker non-traditional mortgage loans like non-QM and alternative financing loan programs. Some of our popular specialty loan programs include non-doc home loans, bank statement loans for self-employed borrowers, asset-depletion mortgage loans, P and L stated income mortgages, non-QM mortgages one day out of bankruptcy and foreclosure, 90% LTV mortgages, non-QM jumbo mortgages with credit scores down to 500 FICO. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
