One of the things lenders look for in a good mortgage application is a minimum of two-years of solid work employment history. They want to have confidence that the borrower has a steady, reliable source of income to pay for the loan. Does this mean you can’t get a mortgage if you just started a new job? Not necessarily. There is some flexibility around this standard.
Lenders Need More Reassurance
If you are starting a new job or recently switched to a new one, your lender will want to have extra documentation to show that this new position will be stable. This might include providing a copy of your offer letter or employment contract that specifies when you’ll start at your new job, as well as the agreed upon hourly wage or annual salary. Lenders will want proof that your job offer has been fully accepted; preliminary job offers won’t cut it. You may also want to present your college transcripts if you are a recent graduate, to show that you have the skills and degree required to fulfill your job duties.
Lenders will also require several months’ worth of bank statements to see that you have enough cash to make your mortgage payments until your new paycheck begins. If you have a retirement account or other savings accounts, these can help your chances of being approved.
Prove You Can Qualify with Your New Base Pay
Even if your new job will include performance bonuses, commissions, or stock options, these will not count towards income unless you already have a history of receiving them. With a brand-new job, you’ll need to show your lender that your base salary is enough to afford the mortgage you want.
A Few Potential Roadblocks
There are a few requirements you’ll need to meet if you want to qualify for a mortgage right after getting a new job. The property you are buying needs to be a single-family dwelling that you intend to be your primary residence. Buying a second home, investment property, or multi-family home will be very hard to do without a continuous employment history.
Being newly employed by a family member might disqualify you from getting a loan. In addition, if your new employer has a stake in your mortgage, meaning if they are a real estate company or mortgage company, they cannot be the ones selling you the home or originating your loan, for conflict-of-interest reasons.
Provide Extra Cash to Sweeten the Deal
One way to lessen your risk factor as a borrower with a new job is to provide a larger down payment than the minimum required. If you can put down closer to 20% of the purchase price, your loan application will be much stronger.
Lenders may also require that you have a much larger amount of cash reserves in the bank than they would if you had been with your current company for a year or more. You should be prepared with three or more months’ worth of mortgage payments on hand to calm your lender’s nerves.
If you recently switched jobs, don’t despair; you still may be able to get a mortgage loan right away. Just know that you’ll need to meet stricter loan qualifications to be approved.
If you have any questions about purchasing a new home, please give us a call today!