How Many Paystubs Do You Need for an FHA Loan?

Getting approved for a mortgage can be a complicated process. As a buyer, you have to show a lot of paperwork to show that you are qualified. Pay stubs are an important piece of proof because they show how much money you make and that you are working.

If you want to get a mortgage backed by the Federal Housing Administration (FHA), how many paystubs do you need? What are the requirements for FHA loans?

What is an FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration. The FHA is a government agency that is part of the Department of Housing and Urban Development (HUD).

FHA loans help make homebuying more affordable by requiring lower down payments and credit scores compared to conventional mortgages. Borrowers only need a 3.5% down payment for an FHA loan. The minimum credit score is 580.

With an FHA-insured loan, if the borrower defaults, the lender will be compensated for losses by the FHA This makes lenders more willing to approve borrowers with lower credit scores and down payments

Why Lenders Require Paystubs for FHA Loans

Lenders want proof you have a stable source of income. Income documentation like paystubs helps demonstrate:

• You are currently employed – Paystubs show who you work for and your position.

• You have regular income – Multiple paystubs establish a pattern of steady earnings.

• You make enough – Paystubs verify your income level. Underwriters check your income is sufficient to make mortgage payments.

Providing paystubs is standard for most mortgage applications, not just FHA loans. All lenders want to confirm your employment status and income before approving a home loan.

FHA Paystub Requirements

According to HUD Handbook 4000.1, FHA lenders must obtain:

• A Verification of Employment (VOE)
• The borrower’s most recent pay stub

This means you need to give your lender at least one recent paystub. However, submitting one paystub is generally the minimum.

Most people who apply for an FHA loan show pay stubs from at least two months in order to satisfy the underwriters. Some lenders even want to see paystubs from the last 12 months.

So while one paystub meets FHA guidelines, additional paystubs help demonstrate stable income. The more paystubs you can provide, the better.

Salaried Borrowers

If you are a W-2 salaried employee, supplying paystubs is straightforward. Print or request digital copies from your employer’s payroll department.

Gather paystubs covering at least the last 30 days. Submitting 60+ days of paystubs is ideal. This establishes a consistent income history over time.

Self-Employed or Commissioned Borrowers

If you are self-employed or earn commission income, extra paystubs are recommended. Provide as much documentation as possible to illustrate regular earnings.

For commissioned borrowers, submit 12+ months of paystubs to calculate your average commission income. You may also need to supply W-2s and tax returns.

For self-employed borrowers, have an accountant provide official payroll documentation. Or gather 24 months of personal and business bank statements showing deposit history.

Explanation for Employment Gaps

Be prepared to explain any gaps in recent employment. For instance, if you were unemployed for 2 months, submit a letter detailing the reason.

Major gaps could indicate income instability. But temporary gaps are understandable – like taking family leave or changing jobs.

Alternatives If Paystubs Are Unavailable

If you are missing paystubs, provide substitute documentation. Alternatives may include:

• W-2 forms – Show annual income from previous years.

• Tax returns – Prove your income based on past filings.

• Bank statements – Demonstrate direct deposit of your salary.

• Letter from employer – Have employer formally verify your income, position, and employment dates in writing.

Discuss alternatives with your loan officer if you cannot supply standard paystubs. The lender may be able to reconstruct your income history other ways.

Paystub Requirements for Other Loan Types

FHA is not the only mortgage option. Here are typical paystub requirements for other common home loans:

• Conventional loans – Usually require 1 month of paystubs as a baseline. But additional paystubs are recommended.

• VA loans – Need 2 years of employment history. Paystubs help verify the continuity.

• USDA loans – Require 2 years of paystubs for salaried borrowers. Self-employed borrowers need 5 years of documentation.

So while specific requirements vary, most mortgage programs request paystubs. The FHA guidelines of 1-2 months of paystubs are generally the minimum lenders expect.

Submit Paystubs Early In the Process

Don’t wait until the last minute to supply paystubs. Provide them upfront when applying for preapproval.

Gathering paperwork like paystubs early allows more time to track down alternatives if needed. Submitting paystubs right away also prevents delays in final underwriting.

Consult Your Lender

Always talk to the actual lender for clarification on their specific paystub requirements. Some lenders overlay additional standards atop basic FHA rules.

Ask how many recent, consecutive paystubs they need. Also verify their preferred file format – digital, photocopies, or original printouts.

With paystubs in hand early, you can get your FHA loan approved and be on your way to homeownership.