Mortgages for people who are “in between jobs”
In-between jobs and want to move? Now, you can.
Via a special program known as the Offer Letter mortgage, U.S. lenders are now making loans based on the “future income” of your next job, and will even approve a loan based on a pay raise you have coming at work.
This means that relocating employees can move their households with only a promise of employment; and recent university graduates can use their future job as a basis for a loan.
If you’ve just graduated law school, or business school, or medical school, and haven’t earned any income this calendar year, you, too, can use the Offer Letter mortgage to get approved for a loan.Show Me Today's Rates (Jun 16th, 2019)
A job offer is now acceptable proof of income
For recent university graduates and employees relocating to a new town, the Offer Letter mortgage helps to simplify homeownership.
The program is based on an ordinary fixed-rate or adjustable-rate mortgage (ARM), and mortgage rates are the same as for any other conventional mortgage type.
There are no special clauses with the Offer Letter mortgage, and no hidden fees.
In fact, there’s exactly nothing that makes the Offer Letter loan unique — except that lenders are willing to consider your alternate calculation of income.
This wasn’t possible as recently as several years back.
When the economy was faltering, mortgage lenders were wary of the job offer letters which U.S. employers were making.
Lenders knew that job offers are sometimes reversed, rescinded, and otherwise subject-to-change — even if they’re written on letterhead and signed by all parties.
Furthermore, as banks had learned the hard way, legitimate-looking job offers can be forged without much effort.
To protect against fraud and revocation, then, banked created rules which burdened an employee with additional form of proof-of-work — typically, 30 days worth of pay stubs.
The rule rendered job offers worthless. No 30 days on the job, no loan approval.
Today, banks have loosened up. Two pay stubs are no longer required to get approved for a loan — a signed offer letter works just fine.Verify your new rate (Jun 16th, 2019)
Official “offer letter mortgage” guidelines
Lenders have learned a lot since last decade’s credit market downturn. Notably, they’ve improved their ability to separate acceptable risks from unacceptable ones.
Common sense is returning to mortgage lending, and it’s helping today’s U.S. home buyers.
One such example is the return of “offer letter income” as allowable income.
For home buyers relocating for a job; returning to work after a layoff; or expecting a pending pay raise, with a written letter from an employer, lenders will make the loan using the offer letter’s stated income for qualification.
To use “offer letter income”, these 5 criteria must be met :
- Provide a non-contingent offer letter, signed by the applicant and the new employer
- Provide evidence that the job start date is within 90 days of the mortgage closing date
- Provide evidence that the subject home will be a primary residence
- Provide evidence that the subject home is a detached single-family residence, town home or condominium
- Sufficient reserves to pay mortgage payments plus real estate taxes and homeowners insurance during the gap between closing and the job start date, plus an additional 3 months of reserves
Here’s a real-life example of how the reserves part of the Offer Letter Income program works.
Assume that a recent business school graduate took a new job that starts 2 months from today. It could be in-town, or across the country.
So long as the graduate plans to move into the home; and the home is not a multi-unit; and there’s enough money in the bank to cover 5 months of total housing payments, the graduate can use the income from the offer letter on a mortgage application.
The Offer Letter Income program works for people expecting a raise at work, too.
If the new salary starts within 90 days of closing, and is supported in writing by the employers, the new income is usable for purposes of a mortgage.
Note that in all cases, a mortgage applicant’s loan size is limited to the local conforming loan limit.
In high-cost areas such as New York City and San Francisco, that amount is capped at $726,525. In cities such as Chicago and Philadelphia, the limit is $484,350.
The Offer Letter Program does not require proof of graduation.
Check your eligibility for an Offer Letter mortgage
If you’re a professor planning to buy a home, or a graduate moving cross-country for work, you don’t have to be a renter, if you don’t want. You can buy a home if you’d prefer to be a homeowner.
Connect with an “Offer Letter Lender” now. Your social security number is not required to get started, and all quotes come with instant access to your live credit scores.Verify your new rate (Jun 16th, 2019)