You’ve likely heard you need a 2-year job history to get a mortgage.
It’s true – but that’s not the whole story. You can get a mortgage if you don’t have a two-year job history. It’s not an automatic reason to decline a loan, so don’t give up until you know the truth.
Lenders want proof of your creditworthiness (good credit) and the ability to repay the loan (income). But many factors make up both situations; it’s not a one-size-fits-all approach.
Let’s look at some scenarios.
The Borrower with a Solid Work History
The ‘textbook’ borrower is someone with good credit and a solid job history, working at the same job for many years. You show the lender your ability to pay the loan back with your stable job history and your willingness to do so with your good credit score.
A borrower in this situation won’t have trouble getting a loan, assuming all other factors are attractive.
The Borrower that Changed Jobs
Here’s where the myths begin. Many people believe if they changed jobs that they can’t get a loan. That’s not the case because it depends on the details.
- Did you change jobs and stay in the same industry? That’s a lateral job change. Most lenders let this count as a stable job history because you have experience in the industry and are likely to succeed at your new job. As long as your income is stable (you didn’t take a job for much lower pay), lenders should accept the job change even if it was recent.
- Did you change industries? This is where things get a little tougher. It’s not a deal-breaker, but you need proof that you can succeed in the business. Typically, this means proof of training or education. For example, if you went from working as an accountant to working as a real estate agent, they are two different industries. Lenders want proof that you have the proper training to succeed as a real estate agent before counting the income.
The Unemployed Borrower
Sometimes unemployed borrowers can get approved too, but only if they have a solid job offer on the books.
This means maybe you didn’t start your job yet, but you have a job offer letter and concrete start date. The letter should include your pay and start date for lenders to use it for qualifying purposes. They may require that your start date be within the next 30 days to consider it too.
If you’re unemployed without a job offer, though, there are no exceptions to the rule. You need proof that you can repay the loan and without a job, that’s hard to do.
Don’t let a job change keep you from looking at your loan options. As long as you have the proof that you can succeed at the job and/or have a solid offer in place, you have a good chance of getting the loan approval you need whether to buy or refinance a home.
