What is required when employment is scheduled to begin after the loan closes?

• purchase transaction,
• principal residence,
• one-unit property,
• 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.

• clearly identify the employer and the borrower, be signed by the employer, and be accepted and signed by the borrower;
• clearly identify the terms of employment, including position, type and rate of pay, and start date; and
• be non-contingent. Note: If conditions of employment exist, the lender must confirm prior to closing that all conditions of employment are satisfied either by verbal verification or written documentation. This confirmation must be noted in the mortgage loan file.

Also note that for a union member who works in an occupation that results in a series of short-term job assignments (such as a skilled construction worker, longshoreman, or stagehand), the union may provide the executed employment offer or contract for future employment.

Prior to delivery, the lender must obtain the following documentation depending on the borrower’s employment start date:

• Employment offer or contract; and
• Verbal verification of employment that confirms active employment status

• Financial reserves sufficient to cover principal, interest, taxes, insurance, and association dues (PITIA) for the subject property for six months; or

• Financial resources sufficient to cover the monthly liabilities included in the debt-to-income ratio, including the PITIA for the subject property, for the number of months between the note date and the employment start date, plus one. For calculation purposes, consider any portion of a month as a full month.

  Financial resources may include:

  • financial reserves, and

  • current income.

Current income refers to net income that is currently being received by the borrower (or coborrower), may or may not be used for qualifying, and may or may not continue after the borrower starts employment under the offer or contract. For this purpose, the lender may use the amount of income the borrower is expected to receive between the note date and the employment start date. If the current income is not being used for qualifying purposes, it can be documented by the lender using income documentation, such as a paystub, but a verification of employment is not required.