A Two-Year Job History Isn’t Always Needed to Get a Mortgage

“Can I get a mortgage if I just started a new job and don’t have a long job history?” This is a common question among prospective homebuyers, and the answer can vary significantly. While many mortgage lenders prefer applicants to have a two-year job history, this isn’t a strict requirement for everyone. The specific employment criteria you’ll need to meet can differ based on the lender and the type of mortgage you’re interested in.

Understanding Employment History Requirements

How Long Do You Have to Be Employed to Buy a House?

As a general rule, mortgage lenders often require two years of employment history to qualify for a home loan. However, your job history is just one of several criteria underwriters will check when you buy a home or refinance an existing mortgage. Factors like your credit score, debt-to-income ratio (DTI), and down payment size also play significant roles in the approval process.

A career change or shorter job history can pose challenges to homeownership, but it’s an obstacle you can often overcome, especially if your loan application is strong in other areas.

Can I Get a Mortgage If I Just Started a New Job?

Yes, you may be able to secure a mortgage even if you’ve just started a new job. However, your ability to do so will depend on various factors, including the industry you’re working in. While lenders typically consider your last two years of employment, this doesn’t always mean you must have been in the same job for that duration.

For instance, if you were a staff accountant in one industry and transitioned to a similar role in another, lenders may view this as an acceptable lateral move.

Example Scenarios

Career Change: If you were a software industry accountant and switched to a medical field accountant, this change may be acceptable to lenders.

Education as Experience: Suppose you spent four years completing an accounting degree and worked temporary jobs during the summer. If you land a full-time accounting position after graduation, your education might count as part of your job history.

Conversely, if you have a long job history but have frequently switched between unrelated fields, this could raise red flags for lenders. For example, if you worked as an accountant, then switched to bartending, marketing, and finally personal training, lenders may require a letter of explanation for your varied job history.

How to Get a Mortgage If You Just Started a New Job

If you’ve recently started a new job and want to apply for a mortgage with less than two years of job history, consider the following strategies to improve your chances of approval:

Shop Around for Lenders: Not all mortgage lenders have the same requirements for new job applicants. Finding a lender willing to work with you can make a significant difference.

Build Up Your Savings: A healthy savings account can demonstrate to lenders that you have a financial cushion. This can also help cover your down payment and closing costs.

Check Your Credit Score: A good credit score can enhance your chances of mortgage approval. Review your credit report and take steps to improve your score if necessary.

Provide Additional Documentation: Be prepared to submit documentation that verifies your income and employment stability, such as a job offer letter or employment contract.

Consider a Co-signer: If you’re struggling to get approved on your own, having a co-signer with a stable income and good credit can help you qualify.

Navigating Job Changes While Buying a House

Changing jobs while buying a house might not be ideal, but it doesn’t necessarily spell disaster for your mortgage application. Here are steps you can take to reassure your lender:

Get a Letter from Your New Employer

An employment letter from your new employer can provide essential details about your start date, role, and salary, helping to alleviate lender concerns.

Verification of Employment (VOE)

Some lenders may request a more formal Verification of Employment, which could involve direct confirmation from your new employer regarding your ongoing employment.

Provide Pay Stubs

If you’ve already started your new job, providing recent pay stubs can serve as proof of stable income, especially if your new position comes with a pay increase.

Job History Requirements by Mortgage Loan Type

Different mortgage loan programs have varying requirements regarding employment history. Here’s a breakdown:

Conventional Loans: Typically require two years of related history. If there are employment gaps, you must be at your current job for at least six months.

FHA Loans: Require two years of related history but are more lenient regarding gaps. You must be employed in your current job for six months.

VA Loans: Accept relevant schooling or military service as part of your employment history. If you’re active military, you must be more than 12 months from your release date.

USDA Loans: Have no minimum requirement in your current position but require proof of two years of work or related job history.

Conclusion

In summary, while a two-year job history is often preferred by mortgage lenders, it is not an absolute requirement. Many factors can influence your eligibility, including the type of mortgage, your credit score, and your overall financial situation. If you’re considering applying for a mortgage with a short job history, it’s crucial to be proactive, gather necessary documentation, and communicate openly with potential lenders.

By understanding your options and preparing adequately, you can navigate the mortgage process successfully, even if you’ve just started a new job.