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Lenders examine several factors when evaluating your mortgage application, with employment carrying significant weight. In general, they want to see you’re well established in a job that provides a reliable, steady and sufficient source of income.
Starting a new job doesn’t have to be a hurdle for getting a mortgage. In fact, it’s possible to get a mortgage without two years of work history. It just might take a few extra steps.
Getting a Home Loan Without Two Years of Work History
When you apply for a mortgage, your lender needs to be reasonably confident that you’ll be a responsible borrower. Loan underwriters look at factors such as borrowing history, credit score, income and employment. Employment is important enough that lenders typically require two years in the same job to demonstrate employment stability.
However, that’s just a general rule, and not the only consideration lenders make.
Generally speaking, if you recently changed positions in a company or moved to a higher-level position in a new organization, that’s less concerning than if you started a job in a new field or have a six-month employment gap.
In many cases, even people without two years of work history can still get a mortgage. For instance, a new college graduate could qualify based on a verified job offer and a high salary, or military members who were recently discharged can typically get a waiver for starting work that’s similar to what they did in the military. You may even be able to get an exception if you have a doctor’s report for a medical condition that keeps you from working.
Even if none of these situations apply to you, you may be eligible for a loan based on a high credit score, or a low debt-to-income ratio.
Changing Jobs While Getting a Mortgage
When it comes to getting a mortgage with a new job, timing is everything. You’re in much better shape if the job change occurs before you apply for your mortgage.
Job Change Before Applying for a Mortgage
If you started a new job shortly before applying for a mortgage, you’re probably still in good shape. Again, it comes down to factors like the reasons for your job change, whether you got a promotion and if your income has increased.
Generally, if you can show your lender you have had reliable employment and will continue to, they’ll be more inclined to approve your mortgage.
Ultimately, it depends on the lender’s underwriting criteria. If you can’t get approved with one lender, it’s always worth trying another.
Job Change After Applying for a Mortgage
Changing jobs while you’re already buying a house is a different story. That period between your initial loan preapproval and your closing date is very delicate.
Your lender will scrutinize every aspect of your financial situation to ensure you’re a reliable borrower. They want the picture you provide during the application process to represent your situation when you start paying off your loan. Any changes, whether it’s opening a new credit card or starting a new job, will cause your lender to restart the process.
That doesn’t necessarily mean getting a new job while your loan is under review will disqualify you. But at the very least, it will probably slow down the process and delay your closing date. If at all possible, it’s worth delaying that job change until you have the keys to your new house.
» MORE: See today’s refinance rates
Changing Jobs While Buying a House
Despite your best efforts, you can’t always time your job changes exactly right. That doesn’t mean your mortgage chances are doomed. If you are changing jobs while you’re in the process of buying a house, here are a few things you can provide to improve your chances:
- Employment letter: A simple letter from your new employer with a start date, job role and salary may be sufficient for your lender.
- Verification of employment (VOE): In some cases, your lender may require a more formal verification, either in the form of a phone call or written confirmation. This may include a statement that your employer expects your employment to continue.
- Recent pay stub: If you’ve already started the new job, a recent pay stub will serve as extra verification that you’re gainfully employed and making sufficient income.
Submitting this information can drastically improve your chances of getting approved for a loan, regardless of your recent job change. Whether or not you change jobs while getting a mortgage, a strong credit score and low debt-to-income ratio will help show lenders that you’re a low-risk borrower.