How Employment Affects Qualifying for a Mortgage

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How Employment Affects Qualifying for a Mortgage


Perhaps you’ve read articles and books on how to qualify for a mortgage. Information buried in these pages might include tips on how to raise your credit score, how to save for a down payment, and tips on how to get rid of consumer debt.

Although these factors have a major impact on whether you’re approved for a mortgage loan, other factors like employment record also impact mortgage approval. Choose a lender only after Comparing the Latest Rates. Mortgage lenders do not approve every applicant, and they closely check employment records to see if an applicant qualifies. Don’t let a single mishap in your employment history delay your dream of buying a house.

Two-Year Employment Rule: Many people dream of walking away from their bosses and unsatisfying jobs. But if you leave your job prior to buying a house, you can actually delay the process. Mortgage lenders consider stability when assessing employment records. If you’re someone who likes to start and quit jobs, or if you have long employment gaps over the past two years, lenders might conclude that your income is unreliable and deny your mortgage request. Two years of consecutive employment is key to getting a mortgage, which is verified with employment stubs or W-2 forms.

Switching Occupations: Being employed alone isn’t enough to get approved for a home loan. Lenders prefer that applicants stick with the same employer for two consecutive years. On the other hand, occupational changes aren’t necessarily a deal breaker as long as you remain in the same field. For example, a teacher taking a job in a different school district wouldn’t be penalized like someone who switches from working as a teacher to owning his own business.

Self-Employment: Being self-employed doesn’t stop you from getting a home loan, and your lender might not require a cosigner. The key to buying a home while self-employed is being able to provide at least two years of tax returns. This indicates the stability of your company and shows that you receive consistent income.