Getting a mortgage during a job change happens frequently, it may simply be that you are relocating with the same employer and want to buy to avoid moving twice. For some, it is an opportunity that you need to take – a higher salary or maybe a greater opportunity to move up within the new company.
For most, a new job will not affect your mortgage approval. Sometimes you just need an offer letter and possibly a verification of employment showing that the new job is permanent – the offer letter should not be contingent on anything. If you have just started a new job, you will need a verification of employment and a paystub. Underwriters want to see a two year employment history. If you have been at the same job for at least two years, it's fairly easy. If you have switched jobs in the last two years, we will need to see paystubs and w2's, plus we may need a letter for any employment gaps. You may need to write an explanation letter if you have had frequent job changes. If you have had employment gaps, you will probably need at least 6 months on your current job before an underwriter approves your mortgage.
Acceptable job changes are those that stay in the same line of work and are considered advancements. If you are accepting a new position with higher income and have been in the same line of work for at least two years, it can be considered a positive move to an underwriter. One of my clients just accepted a job that was more permanent than the one she had been at for over two years. This was a positive move as her hours were more steady and the pay was higher. Underwriting did not have a problem with this job change.
For those that are self employed or commissioned, a job change could be an issue. If you have been a w2 employee, with a regular hourly wage and you start a job that pays commission, you will have a problem getting a mortgage. If you are getting a base salary along with commission, the underwriter will probably just use the base salary. With commission income, you need a history to show what your commision will be. Commission income will vary and so it is usually averaged over a two year time span.
For those that are self employed, you need a two year history. This also can apply to those that are contract employees. Some people will take a position as a contract employee – meaning you are paid by a separate company but assigned to work somewhere – usually these are short term positions but may be longer. I have seen some contract employees that are renewed every six months, others that are one or two years in length. If you are a contract employee that is 1099'd – as in your employer does not take out taxes and insurance, you're considered self employed and need a two year history.
Lenders want to see stable employment to know that it will continue. They are looking at a borrower that will be taking on a 15 or 30 year mortgage, so they want to know that the borrower will be able to make the mortgage payments over the next 30 years. As long as you can show stable, steady employment, job changes should not affect your ability to get a mortgage.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc, AnEqual Housing Lender, NMLS#150953 - Email - Website
