The Federal Housing Administration has announced new flexibility for lenders when qualifying borrowers who experienced previous employment gaps or loss of income due to the COVID-19 pandemic. The FHA defines a COVID-19 related economic event as a temporary loss of employment, temporary reduction of income, or temporary reduction of hours worked during the presidentially declared COVID-19 national emergency. The guidance announced today includes provisions for salaried and non-salaried wage earners and addresses the needs of those who are employed full-time or part-time, self-employed, earn bonus or tip income, and/or earn commission income.
FHA lenders should refer to Mortgagee Letter 2022-09 for further information.
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