One of the most important factors in qualifying for a mortgage is your employment status.
Unless you are retired and no longer need to be in the workforce, a lender is only going to consider offering you a loan if they can trust that you will continue to earn the income necessary over the years ahead to continue to make timely payments on your mortgage. Let’s go over some things you should know about employment requirements when you are applying for a home loan.
- Lenders look for at least two years of steady employment. In general, you need two years of steady or relatively steady employment to qualify for a mortgage. This rule is not as inflexible as you might imagine, however, For example, employment gaps might be acceptable if you have been in your current job role for six months or more. There are also situations where education might substitute for work experience. Mike Peacore, President of Blue Square Mortgage shares, “For instance, if you recently graduated with a four-year university degree and started working in your field, you might still qualify for a mortgage even if you do not have two years of employment behind you.”
- Switching jobs is okay. Although you need to try and document two years of steady employment, it is not necessary for those two years to take place at the same company in the same job.
- Your work history needs to tell a consistent story about your career track. If you have switched jobs, the story which your work history tells needs to be one of consistency and advancement along a clearly identifiable professional path. If all of your work has been in the same industry, even with a variety of job roles, that could tell a consistent story. Likewise, if all of your work has been in roughly the same job role, even if you’ve switched companies and industries, that also might tell a consistent enough story. But if you have been all over the map with industries and job roles, you might have a difficult time demonstrating that you are reliable enough to make future payments over the lifetime of a mortgage.
- Decreases in pay or hours may stand in your way. If you have had your hours cut or salary reduced, that will act against you in a mortgage application. Nevertheless, these days, a lot of people have seen a reduction in income who are still on a solid enough career track. So, a mortgage lender might make an exception for you if you can provide an adequate explanation for the situation.
- A job offer letter might or might not be acceptable. There are lenders that will only accept pay stubs or a signed employment contract as proof of your employment. But there are also lenders that will accept a job offer letter. It is best not to make any assumptions. Ask what documentation you need before you apply for a mortgage.
- Stated income loans can help you apply successfully in many situations. If you are self-employed, own a business, are an investor, or have some other non-traditional income situation, you might run into hassles with the traditional loan application process at a big bank. Consider the easy alternative of applying for a stated income loan through an independent mortgage company instead. Doing so will give you alternate means of proving your income and demonstrating that you are on a solid career course. At Blue Square Mortgage offers both the traditional loan process and stated income loans.
Blue Square Mortgage Can Help You Apply for a Home Loan in Seattle
Have questions about how employment pertains to mortgage applications, or ready to apply for a competitive home loan in Seattle or elsewhere in Washington state? Please give Blue Square Mortgage a call today at (206) 352-6453 to schedule your consultation.