Good for both LTR and section 8 rentals depending on what strategy you're looking to employ. 

Here’s the catch: I’m not sure how to go about getting a loan with no current employment.

I would find a market with good median rents, and low home costs, and a location that has some indicators that would support future price growth (pop growth, job growth, large businesses/employers moving there).

The presence of major employers and tech companies, coupled with ongoing job creation, positions the Raleigh-Durham area as one of the top locations for job seekers and investors.

For example currently I have a tenant who has a delinquent balance because of employment difficulties.

Being that the loans are based on the potential income, would employment also be a factor?

Beyond the formal checklists: no evictions, 3-4x income to rent, prior landlord references, employment checks; I would also look at things like responsiveness to communication when we are setting showing, were they on time to showing, did they look me in the eye and shake my hand, did they show up to showing high?

With Electric Boat being a main employer in the area, along with the Coast Guard and Navy Base, it makes it a great place to invest!

Are most landlords/PMs not contacting employers and instead simply trusting the paystubs provided?

For myself, I own an e-commerce business so I am self-employed.