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Use Temporary Disability and Temporary Leave Income to Qualify for a Home Loan


How it Works

Temporary leave typically refers to short-term absences initiated by employees for reasons such as maternity or parental leave, short-term medical disability, or other acceptable forms of temporary leave. However, it’s important to note that mandatory leave initiated by an employer, such as furlough or layoff, does not fall under the category of temporary leave.

To apply for a home loan using temporary leave income, certain documents are usually required. These documents help establish the borrower’s intent to return to work and provide evidence of their income during the temporary leave period. Here are the typical documents needed:

  • Written statement: The borrower needs to provide a signed statement confirming their intention to return to work and specifying the agreed-upon date of return.

  • Verification of employment: A written verification of employment from the employer is necessary. This document should outline the details of post-leave employment and income. Alternatively, the lender may accept the most recent pay stubs that show regular employment income along with temporary leave income.

  • Amount and duration of temporary income: It is essential to provide documentation that specifies the amount and duration of the temporary leave income received.

  • Return to Work letter: In some cases, when an employer utilizes the services of a third party to administer employee leave, a Return to Work letter generated by the employer or the designated third party may be required. This letter confirms the date when the borrower is expected to return to work.

  • Confirmation of leave start date: The borrower needs to provide evidence of the leave start date. This can be achieved through various means such as written verification of employment, pay stubs, or documentation directly from the employer.

If the borrower does not intend to return to work by the first loan payment date, the lender must consider the lesser of the borrower’s temporary leave income (if any) or their regular employment income. If the temporary leave income is lower than the regular employment income, the lender may be able to supplement the temporary leave income with the borrower’s available liquid financial reserves.

It’s important to consult with us so we can provide specific guidance and requirements based on the borrower’s unique situation.