Getting a mortgageÂ during a job transitionÂ isÂ common, and not a deal breaker for your mortgage.
For example, you relocate for a new position. You want to buy right away, instead of moving twice.
Or, you're staying put but just changing employers.
You can get a mortgage when between jobs by applying for an offer letter mortgage. If you are already in your new job, that is even easier.
Most of the time.
To be approved, you need income that is reliable, stable and likely to continue for at least three years. And for new jobs, you have to be making an upward -- or at least lateral -- move within the same industry.
You donâ€™t have to avoid job or career changes before applying for a mortgage, as long as you go about them the right way.Click to see today's rates (Sep 24th, 2017)
As long as your current job does not have a termination date, most lenders consider your employment to be permanent and ongoing.
Standard mortgage applications need a two-year work history listed. If youâ€™ve been at your job or within the industry that long, no further questions are needed.
If youâ€™ve got less time at your position than two years, your history comes into play. Hereâ€™s what the lender looks for:
If you change jobs before applying for a mortgage, lenders will have questions, and they will want more information from you. Be prepared to explain why you changed jobs, and list your qualifications for the new position.
Most job changes should not adversely affect a mortgage application.
Know how your lender will view your career move before you apply. If it doesn't "make sense," delay your job change until your mortgage is fully completed.
Bill has been working as a tax accountant for several years for the same company. He has been recruited by another firm, and itâ€™s offering him 20 percent more income than his current company.
He wants to accept, but his new home is under construction and wonâ€™t close for two more months. Bill is concerned that a job change will affect his mortgage approval.
Billâ€™s job change should not impact his application negatively. In fact, the additional income will be viewed as beneficial.
The lender will require at a minimum, an offer letter from the new employer. Bill will also supply a pay stub, if he receives one before closing of the loan.
Pat is moving to take a new job and wants to buy a house right away. In fact, sheâ€™d like to buy her house before she starts work in her new town, but sheâ€™s worried about being approved for a mortgage when sheâ€™s not yet working.
Sheâ€™ll be coaching a college volleyball team and has been given a five-year contract. She has coached high school girls for over a decade, but this is her first college team.
Patâ€™s new job will also be viewed as a positive.
Note that frequent job changes do not disqualify applicants as long as they make sense.
FHA says a borrower who continues to advance in their line of work should be considered favorably.
Not all career moves are acceptable to mortgage lenders, even if you get paid more.
This is where you have to be careful. The following is a list of changes that could jeopardize your approval.
Even if your pay increases, be careful about your pay structure. A seemingly small change can make a big different in your approval status.
Companies alter employee pay structures on occasion. They move a bigger portion of pay -- or all of it -- to bonus or commission.
While this gives the employee the potential to make more, future variable income cannot be counted without history.
The incentive-based portion of your income must have been received for 12 to 24 months, depending on the overall strength of your mortgage application and loan program.
FHA loans, though, allow commission-based income to be counted with less than a 12-month history. The employer must have changed the employeeâ€™s pay structure, and the employee must be in the exact same position with the same employer.
You might sit at the same desk. You might do the same job for the same people. You might make more money.
But once you become a contractor, you become self-employed. Youâ€™ll need to show 12 to 24 months of self-employment income to get a mortgage with most lenders.
Itâ€™s one thing to go from driving a forklift for Ace Construction to driving one for Tip Top Builders.
Itâ€™s another to switch from a pharmaceutical sales rep to a night club manager. Delay the radical careerÂ changeÂ until you close on your mortgage.
A recent job change is not a big deal, unless itâ€™s the latest move in a history of job hopping.
Going from college intern to full-timer at the same company to manager at a new firm makes sense. Youâ€™re checking the boxes and moving up.
However, â€śprogressingâ€ť from multi-level marketing to Uber driving to personal training to dog walking makes you appear flighty. Lenders want long-term, steady employment. They are, after all, issuing a loan at a low fixed rate for up to 30 years.
Mortgage applicants are getting approved at the highest levels this decade. Even if you think you canâ€™t receive an approval, itâ€™s worth checking your home mortgage eligibility.
Get a quote for your mortgage. No social security number is required to start, and all quotes come with access to your live mortgage credit scores.Click to see today's rates (Sep 24th, 2017)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)