Rebecca Richardson - Mortgage Consultant
How Your Job Affects Your Loan Approval
Did you know that your employment is a factor in your loan approval? Let’s talk about it.
Lenders use your employment and income to assess their risk in lending you money and your potential to pay your mortgage installments on time.
You might need to be in the same job for 2 years to qualify if you are commission-based, if you’re 1099 or self-employed, or if you need bonus income in order to qualify.
But if none of those situations apply to you, you don’t usually need to have 2 years at the same employer, in the same job.
You’re more likely to be eligible to start your home loan journey if:
Let’s say you recently changed jobs. It’s okay to go ahead and buy and in some cases, for some loans, you can actually purchase before you start your new job.
You can also buy if you’ve had a gap in your employment. Maybe you stayed home to be with your children or because of Covid. Whatever the reason is, if you are back to being employed, depending on how your pay is structured, and depending on the loan type, you may be able to buy immediately. If not, you only need a short 6-month wait.
And this one is key and often overlooked. You can actually start the buying process if you just graduated from college. This means you can buy early in your twenties and start building that equity, quickly.
To get more information about your income and employment, lenders will ask for documentation to verify the information you provide, directly from your employer.
Lenders can also ask for information about your past employment in order to learn more about your financial situation if you have not been at your current place of employment for 2 years or more.
Sometimes, your employer may not be willing or able to directly provide the information, for security purposes or based on state laws. In these cases, you can contact your human resources department or ask your lender what they recommend if they specialize in transactions in your particular state.
Also, be prepared to provide proof of the income you state when you’re in talks with your lender.
Guidelines around employment can be complex so it’s ideal to talk to a lender early in the process to see how it affects your loan approval.
If you have any additional questions about starting your home buying process, you can contact me by emailing (firstname.lastname@example.org) or finding me on Instagram (@the.mortgage.mentor).