On July 7, 2022, the Federal Housing Administration (FHA) issued updated Mortgagee
Letter 2022-09 (ML 2022-09) that will allow FHA lenders to utilize flexible
underwriting guidance to qualify borrowers for home ownership using FHA-insured
mortgage financing if those borrowers experienced previous employment gaps or
loss of income due to a COVID-19 Related Economic Event by instructing FHA
lenders how to calculate Effective Income for those borrowers.
ML 2022-09 defines a COVID-19 Related Economic Event as a temporary loss of
employment, temporary reduction of income, or temporary reduction of hours worked
during the Presidentially Declared COVID-19 National Emergency.