How Does a New Job Affect Your Ability to Get a Mortgage?

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Filed under: Qualifying for a Mortgage Loan

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Changing jobs is a pretty normal thing these days and for the most part, it’s usually a positive thing.  Perhaps you were offered a better paying position, the opportunity to move to a more desirable location, or the chance to go from “staff” to “management”.  Any of these could be a fantastic situation for you and your family.

But…   how does this employment shift look to a mortgage company and will it affect your ability to get financing?

Most people will think that a lender’s primary concern is how much money you make.  While your income is definitely important to a lender, so too is your job stability and nothing makes a mortgage company more nervous than a new job, especially if it’s in a new field or new line of work.  Lenders will usually want to see a two-year history of employment at your current position.

Why?

Typically, if you’re in a new position with a new company, you have to go through a probationary period during which the company can terminate you for nearly any reason.  Then, even if you pass through the probation with flying colors, there’s a good chance that you’re “low man on the totem pole” and could be let go if the company experiences financial difficulty or a decrease in revenue.  This makes banks view new jobs as a higher risk and could make them less likely to lend the funds you need.

There are a few exceptions however, which include:

You are working in same field, in a position supported by your college degree.  For instance, if you are a pharmacist and you’ve gone from being an employee at one pharmacy to now being an employee at a new pharmacy.  Lenders understand that you are trained and licensed for this position and therefore, risk is lower.

You are newly graduated from college and you are working in your specialty field.  Example:  You graduate from college with a degree in accounting and have passed the exam to become a CPA.  You are now working with an accounting firm and you’ve been there for just six months.  Even though you don’t have a two year history or work, lenders look favorably on this situation.

You have a long history of working in the industry and have moved to a new company.  Example: You have been teaching for 15 years and you recently changed schools.  This is a common scenario that is often accepted by lenders.

Don’t be surprised if the lender requires you to provide additional documentation for this new job.  They may ask for copies of offer letters, contractual agreements, new pay stubs, and sometimes even a letter from your employer stating the terms of your new position.

One word of warning…

If you are already in escrow (for either a purchase or a refinance), do not change jobs.  This sudden shift will almost always delay your closing or even nullify any loan program for which you were previously approved.

Best advice…

If you are contemplating a job change and you also see the need for home financing in your near future, talk with an experienced mortgage professional before making any moves.

Questions? Comments?  I’d love to hear them.  Contact me any time.

 

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