I don't understand why time at college would count towards work history.

And I agree with cpartist: now is the time to save as hard as you can. Every bit helps.

Cash counts in two ways (maybe no one else will agree with this). The amount you have in cash means that you don't need to borrow 'that much'. Many people rabbit on about compounding interest; it seems to me that savings have a compounding effect too.

Maybe someone else can put this theory into English.

I completely agree with you two, so in case the inevitable does happen, I've picked up a part time just for savings purposes. I was told that if I didn't have a full time job, then my part time job has to be for 2 years in order for my income to count. What I'm confused about is that my mortgage banker also stated that since I graduated college, my experience in college would count towards my 2 year work history, if not completely replacing it. I asked the question because I was wondering if college counting as work experience was common. Fortunately my wife has a stable job and if my income doesn't count, then the money I have saved can go towards a down-payment on the house, which would lower the monthly payment, and also lower her DTI ratio into the range that the underwriters find acceptable.

I find it hard to believe that lenders would count college as work/income experience. My niece just went for a loan application. She just graduated UNC with a 4.0 and has been working as a journalist for about 3 months. Her agreement at her new employers is probationary for 6 months and then she gets a substabtial pay increase. Anyhow, my BIL had to finance her transaction. Not only would they not count her employment, but her college "career" was never mentioned.

If the mortgage company is willing to count your schooling as work experience you can bet the interest rate on the loan will be much higher than usual.

I'm starting to see mortgage brokers pop up again. They were plentiful before the crash, and in my opinion were a major part of the crash. They want their commission/non refundable application fee and that's it.

Your work history is the total time you are employed. If you spent two years in school while working full time, you have two years work history, not 4 years. If you spent 6 years in school and received a master degree, you have no work history.

Of course, not all employment histories are equal, adding time working on spotty odd jobs does not have same weight as working for companies as a regular employee in a full time or part time position.

I, too, find it odd that a mortgage provider would consider your time spent as a student as "work history." And I would also not be surprised if the interest rate on a loan by that provider is high.

Yes, that mortgage provider sounds like one to avoid.

Lots of mis-information in this thread, I've been a mortgage banker for over 30 years now.

If a potential borrower is CURRENTLY working a full time salaried position in the field or work they went to school for, that schooling counts towards a 2 year work history and their income can be used to qualify for a mortgage. A copy of their diploma will be requested. This scenario will not affect the interest rate on the loan at all.

The original poster is working part time/full time, not a stable work history at this point seemingly, so regardless of his schooling, his present income wouldn't be used to qualify for a mortgage since it's not stable.

People who take positions that are commissioned or part-time for a short period of time, mostly need to work those commissioned or part time jobs for at least 2 years in order to use that income to qualify for a mortgage, regardless of whether they just finished school or not.

Does college count as 2 year work history?

No, and here's why:

You pay to go to school. The school doesn't pay you. You don't have to show up at school. The school doesn't care since they get your money. Real life jobs/work is completely opposite. The job pays you and they expect you to show up every day.

Now, one could argue that perfect attendance and good grades at college show a worthy person, but college and real life work are still different.

Nonsense, SaltiDawg. How can College possibly count towards work history??

It was Pam, not Salti, said "If a potential borrower is CURRENTLY working a full time salaried position in the field or work they went to school for, that schooling counts towards a 2 year work history and their income can be used to qualify for a mortgage".

May be it is regional, less than 30 years ago when I applied for mortgage on my first job that was in the same line of work as my major, they did not count my years in college as work history.

It is not regional, though I can't say I remember the guidelines from 30 years ago. These are guidelines Fannie Mae, Freddie Mac, FHA, VA and USDA follow.

Pamghatten...I am assuming that was designed for people who are in professional programs. For example, if you major in engineering, for example, then your degree is very specific training to prepare you for a job. However, a lot of people major in things like business, English, history, etc., where there is no clear concrete career path after graduation. I'm assuming that people who do those types of degrees or their career does not correspond with their training would not benefit from this guideline?

There is no distinction between professional vs. a general business, English, history degree. I tried to upload a screenshot from the FHA Handbook that shows the requirement, but I work at a Bank and there is tight security on being able to upload and download anything.

Basically, the FHA guidelines say:

"If the applicant has not been employed with the same employer for the previous 2 years, Lender must obtain one or a combination of the following for the most recent 2 years to verify the applicant's employment history:

1. W-2(s)

2. VOEs (Verification of Employment)

3. evidence supporting enrollment in school or the military during the most recent two full years. "

So a college student who graduated with a BS in Business, who gets a salaried full time job doing whatever (or even a hourly full time job), can qualify for a mortgage using their schooling to satisfy the requirement of a 2 year history.

It's assumed they went to school to learn, and that's training for what they will need to do at a new job, learn the job. So my post above that said "in their field" is inaccurate.

The problem with the OP scenario is working part time/full time and now a different part time job. No stability.

And ncrealestaeguys scenario, if the niece is going to be making a lot more money after 6 months, it sounds like it's other than a salaried job ... maybe commissioned? Not the same thing, income fluctuates ... you need a history to average out the income.

So this means if someone gets a degree in underwater basket weaving, and then secures as say an office manager that their degree (that has nothing to do with their employment) counts towards their work history?

if so that has got to be one of the more ridiculous rules on the books. I get it if you are an accountant and studied accounting, for example, but not for positions completely unrelated to the area of study. No wonder there is confusion about when this rule applies. Thanks for the clarification.

Emma, I have an undergraduate business degree (in Marketing) from a NY university and an MBA from a local university. Neither degrees gave me any real "work" experience. They taught me how to study, learn and work in groups.

So if someone graduates with an underwater basket weaving degree, and someone else is willing to hire them as a Manager ... we will give them a mortgage assuming they qualify for the mortgage, have good credit, etc.

Lenders don't decide who is qualified for the job they end up with, that's up to the company that hired them.

The bank I work for has 16,000 employees ... I bet there are lots of History majors, Liberal Arts Majors, etc. that made a career in banking. And were able to get mortgages before they worked here for 2 full years.

I want to comment about part of Pam's post regarding the FHA:

"If the applicant has not been employed with the same employer for the previous 2 years, Lender must obtain one or a combination of the following for the most recent 2 years to verify the applicant's employment history"

I don't think this means that the FHA considers college attendance the same as full-time employment; rather, I think the FHA considers college attendance/military service as the reason why the person has not been employed full-time in the last two years. An acceptable excuse, in other words.

'It was Pam, not Salti, said...'

Yes, I know azmom, but Salti (bad Dawg) figured that it was true just because someone said so.

I'd keep away from a mortgage broker who told me such rubbish just to get my business. In fact I would keep away from mortgage brokers in general. If a bank is not willing to lend money, perhaps there is good reason.

Allen, the more money you can save before buying a house, the better off you will be, in spades. It really is worth going without, making do. And it gives you something to strive for. Mortgage brokers depend on people to 'want it now'.

'Fannie Mae, Freddie Mac,...'

That says it all.

Even I, on the other side of the globe, know about this lot.

Little bug,

"I think the FHA considers college attendance/military service as the reason why the person has not been employed full-time in the last two years. An acceptable excuse, in other words.",

I thought so too. As in my case, at the time my undergraduate major and work both were in Engineering, but I know for sure they never counted the years in school as work history. Later, they never counted the years I spent in graduate school as work history.

tete_a_tete,

In our side of globe, we do have many great mortgage brokers providing valuable services. Our 'Fannie Mae, Freddie Mac,... have done wonderful things for people too.

Yes, I know azmom, but Salti (bad Dawg) figured that it was true just because someone said so.

You know, to be fair, there are many worse things in the world than taking the word of an expert. Personally, if my dentist told me I had a cavity I doubt I would argue and that is more subjective than this.

Many of my colleagues buy a house with no work experience at all, just an advanced degree and a contract (and they are typically only annual contracts). In the end, the two years of work experience is to demonstrate the predictability of future earnings and someone out there realized that a college degree is also predictive of earnings.

I can't tell you when this started but I can tell you it has certainly been around a long time because I took advantage of it when I graduated college. In fact, I am not sure the math holds true as much today, when many college grads are struggling to find work, as it did 20 something years ago when I graduated.

Since we are on the subject, I also don't agree that you should save as much as you can before you buy a house.

Certainly the decision to buy a home should not be taken lightly, and I believe that at times we overvalue home ownership in the U.S. but there is no way to adequately advise someone when buying a house is a smart financial decision anonymously over the internet.

With current interest rate situations and inventory reduction it is hard to dispute buying homes a bit early in many U.S. markets.

So, I suppose in short, I will shoot for the full time job(I have like 3-4 interviews set up, but that is a different conversation). And no, my interest rate if I didn't have any money to put down would probably be around 3.75-4.15%, as projected by the mortgage company. However my plan is to have a substantial amount of money saved before the closing date, which is in March(the house is being built). IF all goes to plan, the interest rate would probably be at the low end of 3%, which is again, according to the mortgage company's logic. They told me that they use the "college = 2 years work exp" is because usually college means that the borrower's income will increase in time as long as they stay in the field in which they studied.

SaltiDawg, I was trying to be funny too.

.....

'Caption Oblivious' hey? Who are you really? Why hide behind a new name?

Maybe I am oblivious, but I don't like the way that some people try to pull the wool over other peoples' eyes.

And one more thing before I go and do something constructive, not everyone thinks that the time to buy housing is during a period of low interest rates. There is more to the equation than that.

And just one more thing... but I really am going... Allen, have you asked at a bank for a loan? Why have you gone to a mortgage broker? Mortgage brokers caused the global finiancial crisis which was no real surprise to anyone with some kind of logic.

@ tete - I apologize for making you angry, in the end we obviously agree, as the implication of my post was that different situations need different advice.

Unfortunately, we do not agree that mortgage brokers caused the global financial crisis. That is like blaming the pizza delivery guy because you got fat. We live in a complicated world with a complicated economic system, so why are we so hell bent on getting simple answers? In truth, the global financial crisis was probably caused by a combination of significant but not catastrophic problems that magnified each other.

I apologise too. I was feeling really feisty this morning.

6. FHA loans allow recent college graduates to count their time in school as part of their employment history.

To qualify for a mortgage, you have to prove income stability.
Typically, a lender will require that you prove at least two years of
previous employment history in the same field. How do you do that if
you just graduated and you’re starting your first job in your career
path? FHA allows a recent college graduate’s previous school experience
to be used in order to satisfy the two year employment history
requirement.

"Many lenders will use
college credits in the borrower's chosen field to determine experience.
The graduate will have to provide a copy of the degree earned. Lenders
may also request a copy of the borrowers transcripts if the need further
verification. It is easier for graduates to qualify if they have
started a job that is in some way associated with their degree. The
other important consideration is not a great amount of credit but a good
credit history.

College graduates do not need 2 years of work
history if they are working in a field related to their area of study.
The school work fulfills the 2 year work history requirement."

And as an aside, many grad students actually do get paid while getting a degree.

I just realised how a sentence of mine might have been read.

When I referred to sheep and wool and eyes I was talking about mortgage brokers, not posters posting until new names.

For some reason my fangs come out whenever I think about money lenders or agents of money lenders or however it works spinning yarns to young people wanting to buy their first home.

Not sure if Americans would understand the Aussie expression of spinning a yarn. It means concocting a story. Fibbing, really.

(wait for it....)

LOL sushi.

I would recommend that you find some college where you can complete your studies externally. For example, when I needed years of work experience, I quickly entered asa college hialeah, because the standard education here is 2 years, but if you make an effort, you can try to complete the course in 1 year, although it will be much more difficult because you need will study the program for 2 years. But there are insanely interesting specialties here, such as business management, psychology, medical care and much more. For example, I was extremely interested in studying psychology at this college, because their program is very good and this knowledge will even be useful to you in everyday life.

Yes it is a necro'd thread but it is a great thread...

Since it is back up... there really is not a two year employment history requirement. Fannie Mae and Freddie Mac set the general requirements for mortgages in the U.S. There has never been a requirement for two years of employment history.

Two years of employment history is the most common way to establish income stability and has become the default, but there are some automatic exceptions to the two year employment history... (1) military service, (2) returning to the workforce after an extended absence - this allows separated periods to be counted as a single period, (3) attending any college or trade program.

In addition to those three automatic exceptions, a lender may use any reasonable exception to demonstrate that two years of employment history is not necessary or the applicant has other means to demonstrate employment stability. Although not an automatic exception, employment contracts are always accepted as a demonstration of income stability (even if they are only for a single year).

The only employment history requirement for a mortgage is that income from fluctuating hourly work must have 12 months of work history.

----

Having said this, a particular bank may set stricter requirements, but you can certainly find a bank that counts two years of college as an exception to work history in every region in the U.S.

Wow, I totally forgot about this thread. Lol!

Did you get the house???

Oh yeah; everything was smooth sailing!