How are gaps in employment considered when analyzing income stability?

For borrowers with gaps in employment of six months or more (an extended absence), the Mortgagee may consider the borrower’s current income as effective income if it can verify and document: 

• the borrower has been employed in the current job for at least six months at the time of case number assignment; and 
• a two year work history prior to the absence from employment using standard or alternative employment verification.  

For additional information see Handbook 4000.1 II.A.4.c.xi(B) or II.A.5.b.xi(B) available at

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-04049