How Lenders View Job Gaps In Mortgage Qualification

This BLOG On How Lenders View Job Gaps In Mortgage Qualification Was Updated On July 28, 2017

If someone wants to apply for a mortgage, there are certain requirements.

  • Need to meet minimum credit score requirements
  • Need a job with consistent income
  • Need assets to cover down payment and/or closing costs
  • Need to have timely payment history in past 12 months
  • Mortgage borrowers can qualify for home loan with judgments and tax liens but only with payment agreements

One of the most important factors a mortgage lender wants to see is the borrower’s ability to pay their future mortgage payments on a timely basis.

  • The way they derive to this probability is how long the mortgage applicant has been at their current job and historical salary pattern.
  • Most lenders view if borrowers have been at the same place of employment with consistent income for past two years, that proves job and income stability.
  • The longer a worker has been in a particular field and job the more stability it shows under the eyes of a mortgage lender and/or creditor. 
  • Gaps in employment in the past two years are often frowned upon by mortgage lenders.
  • However, mortgage guidelines on employment gaps do not disqualify home buyers with gaps in employment in past two years.
  • The majority of mortgage lenders want to see a minimum of two years full time employment. 
  • There are rules and regulations in determining job gaps in mortgage qualification.

How Underwriters View Job Gaps In Mortgage Qualification

Mortgage loan applicants who are planning on applying for a mortgage loan and you had a temporary period of unemployment, you can still qualify for a mortgage loan.

  • Mortgage loan applicants who were laid off from a job for no longer than six months can qualify for a mortgage loan and will not get penalized for being laid off. 
  • Need employment offer letter and 30 days paychecks prior to mortgage underwriter issuing a clear to close.
  • Borrowers can be on new job for less than 30 days and still qualify for a mortgage loan as long as long have not been laid off longer than six months. 
  • However, mortgage borrowers who have been unemployed for longer than six months need to have at least six months longevity on new job in order to qualify for mortgage. 
  • Any periods of unemployment of greater than six months, there is a six month new job seasoning requirement. 
  • Mortgage loan applicants can be employed in a different industry or field with your new job as long as the salary is comparable.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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