In this episode, we covered gaps in employment. In some time in their life, most people will probably have a gap in employment. The reason why gaps are even defined or talked about is that underwriters are looking to see the sustainability and likelihood of you continuing to make an income.
Worried About Employment Gaps & Mortgage Approval?
Even with employment gaps, you may still qualify for a mortgage. Let our experts help you navigate lender requirements and secure financing.
What are some typical gap scenarios?
Typically, a gap scenario is going to come up when someone’s either lost their job and they’re on the market looking for the right fit. People’s situations can vary greatly. If you’re an executive in a corporate job it can take you a year to find the right job, but if you’re looking for entry-level employment, it can take a few months.
And it’s not always job loss. We work with a lot of working class people. We have a lot of mothers and fathers that have stayed home to take care of the kids, are now entering the workforce, and have been working for a couple of months and call about applying for a loan or refi. So, let’s look over the three main loan programs: conventional, FHA, and VA.
Conventional Loans
If someone has had a gap in employment for a long time, say 10 years, and they just got back into the workforce a month ago we would put them into a conventional loan. Neither the FHA nor the VA would allow for this situation. Conventional is going to be flexible because they’re going to be able to look at someone’s situation case by case. The only reason you wouldn’t like conventional is if your credit score isn’t very good. So as long as you have decent credit, conventional is the way to go.
FHA Loans
So, the biggest difference between FHA and conventional is that in the case of FHA if there’s a job gap over six months a two-year work history will be needed. Now it doesn’t matter when that two-year work history was. It can go back 10 years, but it needs to be two years of consecutive work. FHA is where a lot of our first-time homebuyers or lower credit score borrowers will fall. To qualify for the loan you will have to have been with your current employer for six months and the borrower would need to have two years of consecutive work history prior to any job gaps.
VA Loans
The VA is the strictest of all three. It requires borrowers to have at least a 12-month history on the current job if there are any job gaps over 60 days within the last two years.
To Summarize
All programs are fine with job gaps less than 30 days
Fannie Mae technically does not have any job gap maximum allowed limit like Freddie Mac. Technically a borrower can be out of a job for years and come back to the workforce along with a letter of explanation and would be okay. Only full time hourly or salary is allowed in these cases.
With Freddie Mac if the gap is greater than or equal to six months, a letter of explanation from the client is required explaining the circumstances surrounding the gap in employment. Freddie needs a 12-month work history in the last 24 months. Only full time hourly or salary allowed in these cases.
With FHA loans job gaps over six months are an issue. They are doable if the borrower has been with current employer for six months and they have a consecutive 2-year work history prior to any job gaps.
VA loans require the borrower to have a 12-month history on their current job if there are job gaps over 60 days with the last two years. As well, an explanation letter is needed and only full time hourly or salary is allowed.
If you have any questions about this or if you have any questions you’d like us to answer on our podcast, you can submit your questions using our contact form or give us a call at (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.
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Be sure to ask us for a free quote on your next mortgage. We'll personally work with you and help you through the whole process.
Thanks for listening and reading the Mortgage Brothers Show. Let us know if you have any questions you’d like us to answer on this podcast. You can email your questions to Tom@AZMortgageBrothers.com or Eddie@AZMortgageBrothers.com.
Worried about employment gaps affecting your mortgage? Explore our guide on credit card payoff, learn the pros and cons of couple vs single applications, get tips on relocating while remote, discover how a rapid rescore can help, and see why a DSCR loan might be right for you.
Mortgage Brothers LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Mortgage Brothers NMLS 1007154, NMLS #210917 and 1618695. Equal Housing Opportunity.
Transcript of the Mortgage Brothers Podcast
Getting a Mortgage with Employment Gaps
Introduction [00:02]
Today, we’re tackling a common question: “Can I still qualify for a mortgage if I have employment gaps?”
Many borrowers worry that if they’ve taken time off from work—whether due to job loss, staying home with kids, health issues, or other reasons—they won’t be able to get approved for a mortgage. The good news? It’s possible, but each loan program has different rules. Let’s break it all down.
What Counts as an Employment Gap? [01:51]
An employment gap happens when a borrower stops working for a period of time—whether for weeks, months, or even years.
If you leave a job for a few weeks and start a new one quickly, that’s usually not an issue. If you were unemployed for several months or years, lenders will take a closer look at your work history.
Lenders want to see stability and the likelihood that your income will continue. That’s why gaps in employment raise red flags, but they don’t automatically disqualify you.
Common Reasons for Employment Gaps [03:00]
There are many valid reasons why someone might have an employment gap, including:
- Job loss (looking for the right fit)
- Maternity/paternity leave (stay-at-home parents returning to work)
- Caring for a family member (elderly parents, children, etc.)
- Medical leave (disability, recovery from an accident, etc.)
- Military deployment or overseas assignments
- Returning to work after retirement
If your employment gap was due to one of these reasons, you may still qualify for a mortgage—but the lender will need additional documentation and explanations.
Conventional Loans (Fannie Mae & Freddie Mac) [04:37]
Best for borrowers with good credit and stable income.
- You can qualify with an employment gap of ANY length
- You only need to be back at work for at least 1 month
- Requires a written explanation for why you were unemployed
Example: If a stay-at-home parent has been out of work for 10 years but recently returned to a stable full-time job, they can still qualify—even after just 1 month of employment!
Key advantage: Conventional loans are the most flexible when it comes to employment gaps.
FHA Loans [06:20]
Best for first-time buyers, lower credit scores, or smaller down payments.
FHA has stricter rules for employment gaps: if you’ve been unemployed for more than 6 months, you must:
- Have at least 6 months of continuous employment before applying
- Show at least 2 years of prior work history (even if it was years ago)
If your job gap was less than 6 months, there are no restrictions—you can qualify as long as you’re currently working.
Example: If you were unemployed for 5 months and just started a new job, you can apply immediately. But if you were unemployed for 7 months, you must work at least 6 months before applying.
Key takeaway: FHA loans allow for employment gaps, but you need more work history and recent employment stability.
VA Loans [09:28]
Best for military borrowers (0% down, no PMI, flexible guidelines).
VA loans have the strictest rules for employment gaps: if you have a job gap longer than 60 days in the past 2 years, you must:
- Show at least 12 months of continuous employment at your current job
- Provide a written explanation for the gap
Example: If a veteran was unemployed for 2.5 months, they must be at their new job for at least 12 months before qualifying for a VA loan.
Key takeaway: VA loans require longer employment stability after a gap.
Summary: What You Need to Qualify with an Employment Gap [10:07]
| Loan Type | Job Gap Over 6 Months? | Minimum Time at Current Job | Notes |
|---|---|---|---|
| Conventional | Allowed | 1 month | Must provide an explanation |
| FHA | Allowed (with conditions) | 6 months | Must show 2 years of prior work history |
| VA | Not allowed (if over 60 days) | 12 months | Must explain employment history gaps |
Final Tips for Getting Approved with Employment Gaps [11:22]
- Be upfront with your lender—don’t try to hide employment gaps.
- Have documentation ready (old W-2s, pay stubs, letters from employers).
- Write a letter of explanation for why you had a job gap and why you’re now stable.
- If your credit is strong, conventional loans may be the best option.
- If you need FHA or VA financing, make sure you meet the minimum job history requirements.
Key takeaway: Employment gaps aren’t deal-breakers, but they require extra documentation and stable recent employment.
Need Help with Your Mortgage?
If you’re unsure whether you qualify due to an employment gap, contact us for a free quote!
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Disclaimer: This content is for informational purposes only. Please consult legal or financial professionals before making any financial decisions.