This rule is intended to help ensure that borrowers are able to sustain their job and that the FHA loan remains affordable in the long term.
The purpose of this rule is to prevent borrowers from having to incur additional costs in order to get to and from work. For instance, if a borrower was required to make a long-distance commute, they may have to purchase separate transportation or pay for costly car repairs. These additional expenses could increase the overall cost of the loan and make it more difficult for the borrower to make payments.
In addition, there is concern that borrowers who live far away from their job may be at a higher risk of being laid off or missing work due to long commutes. As such, lenders generally want borrowers to live within an acceptable commuting distance from their jobs in order to reduce risk and better protect the security of the loan.
When it comes to determining an acceptable commuting distance, FHA loan rules are quite general. Generally, a commute should not exceed an hour in each direction. However, this time limit can be extended in certain circumstances. For instance, if the borrower lives in a rural area or has access to public transportation, they may qualify for a longer commuting distance than normal.
Ultimately, the goal of FHA loan rules regarding commuting distance is to reduce risk and protect the financial security of borrowers. These rules help ensure that borrowers are able to sustain their job and that the FHA loan remains affordable in the long term. By requiring borrowers to live close to their place of employment, lenders can be confident that borrowers will not incur additional costs due to their commute. Additionally, having a reasonable commuting time reduces the likelihood of borrowers being laid off or missing work, further protecting the lenders’ investment. Ultimately, these rules benefit both borrowers and lenders by helping to ensure that FHA loans remain secure and affordable.
This article was contributed on Jun 25, 2023
