FHA - employment gap & closing costs question

[alexplantman]

Well, after reading some FHA topics here and there, and house prices falling so low, I think I see a light at the end of the tunnel in buying a home. . I have been in the same field throughout my career of 10+ years, as a manager in the corporate finance world. But as alot of people have experienced, I have an unemployment gap, due to layoffs last year) . I am NOT in the market now, but , contingent on rounding up the 3% or 3 1/2 (not sure nowadays) down payment, I could be in the market within the next 12-18 months.

 

So fast forwarding to that point, here is would be the scenario and questions:

1. Employment - would be with current employer for 18 months, with a 3 month gap between them and prior employer due to layoff. I could provide a letter of explanation on this. Prior employer (the one that had the layoffs (boating industry) , I was there for a year and a month.

- Would a letter of explanation suffice to cover their concerns in the employment area, even though I have only been with current employer 18 months or so ?

- Would it raise a red flag that I have NOT been 2 yrs with the same employer the last two years?

 

 

2. Closing costs

- Does FHA have a cap on closing costs amount? Or is it also 3-5% of sale price?

- "up to 6% seller credit for closing costs (not down)" - Is what I've read when I did a search on here on max seller contribution, so that should be enough to cover closing costs... So let's say closing costs come out to 5%, can I use the extra 1% for anything else (ie buy down rate?).

- Anyway to structure the seller contribution to include DOWN payment, so it passes FHA underwritters review?

 

 

tks

Edited February 24, 2009 by alexplantman

[alexplantman]

Bump for the day

[alexplantman]

bump ?

[CreditMcNugget]

I'm no pro, but based on what I've read here on the forums, you should have 2 years with no considerable gaps in employment. If you're changing jobs, it should be within the same field (or you can be going for a salary increase). One would assume that a 3 month gap in employment would be very considerable.

 

I think an explanation would be good, but how would you explain being unemployed for 3 months? I think that would be the biggest deciding factor...

 

I'll give you a hand in getting an answer from a pro, though...

 

*BuMp*

[alexplantman]

Thanks .. I guess with the economy the way it's been and a letter of explanation, together that I am earning more $ now...oh and same field, I am going to assume it shouldn't be a problem then.

[Brian B The Loan Professor]

You should not have a problem with 18 months and a 3 month gap just show more than 2 years in the same line of work and explain the gap.\

The minimum down is 3.5% and the max a seller can contribute is 6% Yes if you have left over it can be USED to your best advantage if it is not used it goes back to the seller. The hard part is finding a seller to agree to cut 6%.

 

Good Luck

Brian

[alexplantman]

You should not have a problem with 18 months and a 3 month gap just show more than 2 years in the same line of work and explain the gap.\

The minimum down is 3.5% and the max a seller can contribute is 6% Yes if you have left over it can be USED to your best advantage if it is not used it goes back to the seller. The hard part is finding a seller to agree to cut 6%.

 

Good Luck

Brian

 

 

Thanks for the info. If the house would appraise higher, he can just add the closing costs to the sale price, I reckon then.. I am hoping with the amount of empty houses, foreclosures, etc... sellers might start getting a little more flexible.