What Employee Relocation Mortgages Are
Employee relocation mortgages are conventional loans designed for people who need to buy a home because of a job transfer or new employment. These aren't special loan products with different rates or terms. Instead, they're regular Fannie Mae mortgages with relaxed rules that recognize the unique challenges of relocating for work.
Your employer must have a formal relocation program that spells out the terms and conditions for moving employees. The program can be run by your company directly or by a third-party relocation company they hire. A simple offer letter saying "we'll help with moving costs" doesn't qualify.
Say you're a software engineer who gets hired by a tech company in Austin. Your new employer has a written relocation policy that covers moving expenses, temporary housing, and home purchase assistance. You find a house and want to close in 30 days, but you can't move to Austin until you finish your current project in two months. This scenario fits perfectly within the relocation mortgage guidelines.
Special Occupancy Rules
Standard Fannie Mae loans require you to move into your new home within 60 days of closing. Employee relocation mortgages give you 180 days instead. This extra time recognizes that work transfers often involve complex timing.
If your move gets delayed beyond 90 days, your lender needs a signed statement from you confirming you still plan to occupy the property within the 180-day window. This protects against situations where borrowers change their minds about relocating.
Consider a pharmaceutical sales rep whose company transfers her from Chicago to Denver. She closes on her Denver home in January but can't relocate until her Chicago territory transition completes in April. At the 90-day mark in April, she'd need to provide a written statement confirming she'll move by July (the 180-day deadline).
How Your Current Home Affects Qualification
One of the biggest advantages of relocation mortgages involves handling your current home's mortgage payment. If your current home is under contract but won't close before your new mortgage, those monthly payments might not count against your debt-to-income ratio.
This exclusion only works if your employer's relocation program includes a buyout agreement. The company essentially guarantees they'll purchase your current home if it doesn't sell by a certain date. You need either a signed buyout agreement or a written statement saying you'll accept the buyout if your home doesn't sell.
A marketing director gets transferred from Atlanta to Seattle. Her Atlanta home is listed for sale but hasn't sold yet. Her employer's relocation program includes a buyout agreement that expires in six months. Even though she's carrying two mortgage payments temporarily, the lender can exclude the Atlanta payment from her debt-to-income calculation when qualifying her for the Seattle home.
Income and Asset Flexibility
Employee relocation mortgages offer several breaks on income and asset verification. Housing allowances from your employer count as stable income without requiring 12 months of payment history. This helps when your relocation package includes temporary housing assistance or cost-of-living adjustments.
If you're transferring within the same company, lenders don't need to verify your employment 10 days before closing. This waives a standard requirement that can create problems when HR departments are slow to respond.
You can also use credit cards or unsecured lines of credit to pay loan-related fees like appraisals, origination fees, or credit reports. Normally, lenders require you to have cash reserves for these costs. If your employer will reimburse these expenses, the lender doesn't need to verify you have the funds upfront.
Employer Assistance Programs
Many relocation packages include employer-assisted homeownership benefits. These might be forgivable loans, grants, or below-market-rate financing to help with your down payment or closing costs. Employee relocation mortgages have special rules for how these benefits affect your qualification.
If your employer provides a loan that doesn't require payments for the first 24 months of your mortgage, those future payments don't count against your debt-to-income ratio. This recognizes that you'll have time to adjust to your new salary and living situation before the payments begin.
Some employers provide equity advances against your current home before it sells. You can use this money for your new home purchase as long as the advance doesn't require monthly payments and your employer has committed to buying your current home if it doesn't sell.
Required Documentation
Your lender needs complete documentation of your employer's relocation program. This includes the specific benefits you're receiving, contribution amounts for closing costs or buydowns, and any assistance with selling your current home.
The documentation can be either the full relocation program manual or your individual relocation agreement. Both must detail exactly what financial assistance your employer is providing and confirm you're eligible for the program.
If you're using foreign credit references because you don't have enough U.S. credit history, you need at least three tradelines from your previous country. The lender will also need a U.S. credit report confirming you don't have sufficient domestic credit references.
What Could Go Wrong
Several loan types are specifically excluded from employee relocation treatment. These include government loans (FHA, VA, USDA), community land trust mortgages, and loans with capitalized interest balances. Make sure your loan officer knows you're seeking relocation mortgage treatment from the beginning.
If your employer's relocation program isn't formal or well-documented, you won't qualify for the special treatment. Informal arrangements or verbal promises don't meet Fannie Mae's requirements. The program must be written, administered consistently, and available to other employees in similar situations.
Timing can create problems if your current home sale falls through after you've qualified based on excluding those payments. If your employer's buyout agreement expires or gets canceled, you might no longer qualify for your new mortgage at the debt-to-income ratio the lender originally calculated.
References
For the official guidelines, see 4408.1: Mortgages made pursuant to employee relocation programs in the Fannie Mae Selling Guide.
Mortgage guidelines change. Stay current.
Fannie Mae and Freddie Mac update their rules several times a year. Get notified when changes affect your mortgage eligibility, required documents, or loan terms.
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Original Freddie Mac Guideline Text
The provisions of this chapter apply to Mortgages made pursuant to an employee relocation program. This section contains:
Additional documentation requirements
Special pooling and delivery requirements
(a)
Eligibility requirements
These Mortgages must be made to a newly hired or transferred employee to finance the purchase of a 1- to 4-unit Primary Residence at a new job location pursuant to an employee relocation program that:
Establishes the terms and conditions under which the employer relocates employees, and
Is administered by the employer or its agent
(b)
The following are ineligible Mortgages:
Government Mortgages
Mortgages with capitalized balances as described in
(c)
Special occupancy requirements
A Mortgage is considered to be secured by a Primary Residence when the Borrower occupies all or part of the Mortgaged Premises as a Primary Residence no later than 180 days after the Note Date or the Effective Date of Permanent Financing for Construction to Permanent Mortgages and Renovation Mortgages. If the occupancy of the Mortgaged Premises is delayed more than 90 days, the Seller must maintain in the Mortgage file a signed statement from the Borrower confirming their intent to occupy the property within 180 days of the Note Date or the Effective Date of Permanent Financing for Construction to Permanent Mortgages and Renovation Mortgages.
(d)
(i)
Underwriting methods
The Mortgage must be one of the following:
An Accept Mortgage
A Manually Underwritten Mortgage, if the Mortgage was:
®
or
Submitted to Loan Product Advisor and did not receive a Risk Class
(ii)
Establishing Borrower credit reputation with foreign credit references for Manually Underwritten Mortgages
For Manually Underwritten Mortgages, when the Borrower does not have the minimum required number of payment references established in the United States as required in
Section 5202.1(a)(i)
, or when the Borrower does not have a usable Credit Score, the Seller may determine that the Borrower has established an acceptable credit reputation in a foreign country if all of the following apply:
The determination is based on a minimum of three Tradelines. (Noncredit Payment References established outside of the United States are not eligible.)
The Mortgage file contains a credit report meeting the requirements of
Section 5203.1
and confirming that the Borrower does not have a sufficient number of payment references established in the United States
(iii)
Current Primary Residence pending sale
If the Borrower’s current Primary Residence is pending sale and the sale will not close before the Note Date of the Mortgage (or, for Construction to Permanent Mortgages and Renovation Mortgages, the Effective Date of Permanent Financing), the monthly payment amount for the property pending sale may be excluded from the monthly debt payment-to-income (DTI) ratio if the employee relocation program terms include a buyout agreement for the purchase of the Borrower’s current Primary Residence and one of the following applies:
The buyout agreement is executed by the Borrower
The buyout agreement is not executed, and the Seller maintains in the Mortgage file a signed statement from the Borrower indicating their intention to accept the buyout agreement if the current Primary Residence is not sold prior to the expiration date of the buyout agreement. Additionally, one of the following must apply:
The Borrower has sufficient reserves, in addition to any other reserves required in the Guide, to pay the monthly payment amount for the property pending sale until the expiration date of the buyout offer as indicated in the buyout agreement
The documented relocation program terms include a provision that the Borrower's employer will make the monthly payments associated with the property until it is sold
(iv)
(A)
Housing allowance
A housing allowance provided as part of an employee relocation program may be considered stable monthly income and may be included in the Borrower’s gross monthly income without documented evidence of the most recent 12 months’ receipt, provided that all other requirements for stable monthly income and asset qualification sources in
Chapter 5301
and employed income in
Chapter 5303
are met.
(B)
10-day pre-closing verification (10-day PCV)
For Borrowers transferring to a new location with the same employer, a 10-day PCV is not required.
(C)
Borrower’s revolving credit card (charges/cash advances) or unsecured line of credit
The amounts charged by a Borrower on credit cards to pay fees associated with the Mortgage application process (e.g., origination fees, commitment fees, lock-in fees, appraisal, credit report and flood certifications) or a cash advance taken by the Borrower on a revolving credit card account or an unsecured line of credit to pay such fees may be considered Borrower personal funds as described in
Section 5501.3
.
If the employee relocation program provides that the employer will reimburse the Borrower for the fees that were charged or paid by the Borrower, then all of the following must apply:
There is no maximum limit on the amount of fees associated with the Mortgage application process that may be charged or advanced by the Borrower if the employee relocation agreement specifically identifies such fees as subject to reimbursement by the employer
The Borrower is not required to have sufficient verified funds to pay these fees
No estimated payment based on the amount charged or advanced must be included when determining the Borrower’s monthly DTI ratio as described in
(D)
Employer Assisted Homeownership (EAH) Benefit
An EAH Benefit may be used as a source of funds to qualify the Borrower for the Mortgage if the terms of the EAH Benefit meet the requirements of
Section 5501.5
, except as modified below.
Unsecured loan
If the monthly loan payment of principal and interest or interest only begins on or after the 24
th
monthly payment under the First Lien Mortgage, the amount of the monthly payment may be excluded from the monthly DTI ratio; otherwise, the required monthly payments must be included in the monthly DTI ratio.
Secondary financing
If the monthly payment of principal and interest or interest only begins on or after the 24
th
monthly payment under the First Lien Mortgage, the amount of the monthly payment may be excluded from the monthly housing expense-to-income ratio; otherwise, the required monthly payments must be included in the monthly housing expense-to-income ratio.
(E)
Equity advance
An equity advance made to the Borrower prior to the sale of their current Primary Residence may be used as a source of funds to qualify the Borrower for the Mortgage provided all of the following documentation is included in the Mortgage file:
An executed buyout agreement or other verification of the Borrower's eligibility for a buyout agreement as part of the relocation program
Documentation of the equity advance terms (e.g., promissory note), which must not require the Borrower to make monthly payments and must include the amount of the advanced funds
Confirmation of receipt of the advanced funds (e.g., a copy of the Borrower's bank statement reflecting the deposited funds, a statement from the title company indicating the funds are being held in escrow, a Settlement/Closing Disclosure Statement for the subject transaction)
(e)
Additional documentation requirements
The Seller must maintain in the Mortgage file the following documentation in addition to any other documentation required in the Guide and the Seller’s Purchase Documents:
Complete documentation of the employee relocation program detailing the relocation benefits, including the employer’s contribution to Mortgage financing, such as:
Closing Costs
Buydowns or other Mortgage financing costs
Payment of expenses incurred in selling the employee’s former residence, if applicable, and documentation evidencing that the Borrower is eligible for the employee relocation program
or
The employer’s agreement with the Borrower detailing the terms of the employee relocation program and any related benefits, including the employer’s contribution to Mortgage financing, such as:
Closing Costs
Buydowns or other Mortgage financing costs
Payment of expenses incurred in selling the employee’s former residence, if applicable
(f)
Special pooling and delivery requirements
Fixed-rate Mortgages made pursuant to an employee relocation program that meet the definition of a relocation Mortgage in Section
6202.3(e)(iv)
must comply with the pooling requirements in
Sections 6202.3(e)(iv)
and the delivery requirements in
Section 6302.17
.
There are no special delivery or pooling requirements for relocation ARMs.
