How Long Do I Have To Be Employed Before I Can Get A Mortgage?
A solid employment history is a good way to demonstrate that you have the ability to repay your mortgage. It demonstrates a trend that you have a source of income where you are able to predictably pay your monthly mortgage payment and ultimately repay the loan. Mortgages are all about risk when it comes to the lender, and there are certain parameters that help better define the risk the lender takes by giving you a loan. This is why most lenders feel comfortable with certain specifics when it comes to employment.
Most mortgages are owned by either Fannie Mae or Freddie Mac or are insured by the Federal Housing Administration (FHA). Because of this detail, most lenders must adhere to their underwriting guidelines which require two years’ worth of verifiable employment. Many other lenders base their own underwriting on the same guidelines for their programs.
Lenders will require a combination of tax returns, tax transcripts, W-2s and recent pay stubs as proof of your income. If you are self-employed, a common source of information includes your tax returns and 1099s, depending, of course, on your specific circumstance.
Your Employment History Demonstrates A Predictable Future
At the end of the day, lenders are in search of stable employment that points to three or more years of future employment. Any gaps in income or extreme fluctuations in income will cause a lender to look a little deeper into your employment history. Lenders will often verify your employment history by either reaching out to your employer or requiring a verification of employment form signed by your employer.
The FHA does not require a certain minimum period of time to have elapsed at your current employer. And both Freddie Mac and Fannie Mae are traditionally more concerned with stable employment over time. This means that jumping positions to increase your pay or because the industry makeup requires it will not be held against you. The focal point is that you are employable and always end up with a stable income even though you may frequently change roles or companies.
What If I Have Changed Employment or Work In a Less Traditional Capacity?
There are other alternatives out there for those who have unique circumstances. Being self-employed is a little different, and some lenders specialize in mortgages for the self-employed. As previously mentioned, the documentation required for self employment is a little different.
There are additionally some workarounds to the general requirement of two years’ worth of employment.
For example, some higher paying positions that require extensive time in school, such as a physician or lawyer, are able to qualify for specific loans. Some lenders can use offer letters to help approve a loan if you are between jobs. Lastly, some lenders will consider alternative income information for gig workers or contractors with the right documentation. So if you do not quite fit the mold of a traditional employment situation it’s not time to despair just yet.
Working with a mortgage broker at Range Lending is a good way to navigate your specific employment situation. While the two year mark for stable employment is the simplest route to getting a home loan, there are methods for those who fall outside the traditional scope of employment. Just as with many other things in life, different lenders specialize in different circumstances and some options are prepared to work with nontraditional employment. Speak with a mortgage broker from Range Lending today to see what options are available to your when it comes to a new mortgage or home loan refinance.
