Do I need to be at the same job for two years to qualify for a mortgage?

Short Answer:

No, you do not need to be employed at the same employer for two years to be approved for a mortgage. Mortgage lenders require a look back at your employment over the past two years. It is acceptable to have switched jobs over those two years, have a small gap in employment, or even be in school over the past 24 months.

Longer Answer:

One of the most common questions that I get asked is "Do I need to be at the same job/employer to be approved for a mortgage?"

Contrary to popular belief, there is no hard-and-fast requirement stating that you must have been at the same job or employer for two years to qualify for a mortgage. While employment stability is indeed a factor that lenders consider, the focus is not solely on tenure at a specific job.

Why Two Years Misconception?

The idea of a two-year job history stems from the fact that lenders typically request at least two years of employment history during the application process. You will be required to declare all the employment that you have done over the past 24 months on your mortgage application. In addition, the lender will verify your employment with current and past employers through verification of employment (VOE) and/or tax transcripts from the IRS. This allows them to assess your income stability and employment trends.

What Lenders Look For

When evaluating your employment stability, lenders typically consider a range of factors:

1. Consistency: Lenders want to see a pattern of steady employment without frequent job changes. This doesn't necessarily mean staying at the same job for two years; rather, it's about demonstrating reliability in your career trajectory.
2. Industry Trends: The industry you work in can influence how lenders perceive your job stability. While certain sectors may experience more volatility, others, such as healthcare or government, are often viewed as stable.
3. Income Reliability: Ultimately, lenders want assurance that you have a stable or increasing income to repay the mortgage.

What If You Haven't Been at Your Job for Two Years?

If you haven't reached the two-year mark at your current job, don't panic. Mortgage lenders may still consider your application if you can provide additional documentation, such as:

• Proof of prior employment history
• Explanation for gaps in employment
• Reserve Assets

Switching Jobs When Buying a House

What happens when you find the perfect house to purchase but are in the middle of switching employers? Again, don't panic. Mortgage lenders understand that you can't always control when you switch jobs.

If you start your new job shortly before the closing of your new house, mortgage lenders might require a copy of your offer letter, any paystubs from your new job, and verification of employment from your old employer.

However, if you won't start your new job until after you close, mortgage lenders will require a copy of your offer with all requirements cleared, verification of employment from your new employer verifying the terms of your offer and your start date must be no more than 60 days after your closing date.

What if I was in school in the past 24 months?

If you were in school for any of the 24 months before buying a house, education can be used to cover the employment. Lenders will require a copy of your transcripts from the school you were at in the past 2 years. In addition, the lender might ask for you to tie your education/degree to the job that you currently hold.

Conclusion

While job stability is an important factor in mortgage approval, a two-year requirement for staying at the same job is a misconception. Mortgage lenders can and do approve people for mortgages who have switched jobs in the past 24 months or even in school. Remember, each situation is unique, and there are often options available even if you haven't met traditional benchmarks.

These blogs are for informational purposes only. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. Should you have any questions about the information provided, please contact me.