Mortgage With New Job Lending Requirements And Guidelines
This BLOG OnMortgage With New Job Lending Requirements And Guidelines Was UPDATED On August 3rd, 2019
Many home buyers think that they need to be in a job for two years in order to qualify for a mortgage loan. This is not the case.
- If home buyers were told by a lender they do not qualify for a mortgage because they have not been in the job for two years, find another lender or contact us
- Home Buyers can qualify for a mortgage with a new job
- Most lenders have mortgage overlays
- Overlays are when the particular mortgage company may have their own lending requirement with the 2-year employment requirement on the same job
- That is not HUD’s guidelines nor Fannie Mae guidelines
- Borrowers can qualify for home loans with gaps in employment
- They can qualify for a mortgage with a new job
- I approve and close mortgage loan applicant’s with gaps in employment and those who started a new job all the time
In this blog, we will cover and discuss Lending Guidelines In Qualifying For Mortgage With New Job.
Gaps In Employment In Past Two Years
One of the requirements to qualify for home loans is to have a two-year employment history.
- Two-year employment history does not mean borrowers need to have been employed by the same employer for the past two years continuously
- Here is case scneario:
- Borrowers who recently got a full-time job in 2017
- Have been unemployed in 2015 and 2016
- Can prove they were employed in 2013 and 2014
- Employment in 2013 and 2014 should reflect borrower had a two-year employment history
- Borrowers could have had multiple jobs also
- Gaps in between are fine as long as they have a record of a 24-month overall employment history
Those who were unemployed for six or fewer months and just got a new job, they can qualify for a mortgage. They cannot close on mortgage loan until they are able to show 30 days of pay stubs.
- The exception to providing 30 days paycheck stubs can be waived with a written employment contract/offer letter
- If unemployed for six or more months and started a new job, then need to have been employed for six months in new full-time job
- Exceptions and waivers for the six month waiting period is to qualify for a conventional loan
- Provide an employment contract
Recent College Graduates Qualifying For Mortgage With New Job
Full-time college students or students from an accredited technical school, the two-year employment history requirement is waived in lieu of providing lender college transcripts or technical school transcripts.
- Recent college graduates will get approved for a mortgage with a new job
- Recent graduates can start the mortgage approval process the day they get a full-time job
- However, need to provide 30 days of paycheck stubs before they can close on a home
What Income Will Be Used If I Go From Part-Time To Full-Time Employment
Borrowers currently employed part-time and the company they are currently working promotes them up to full-time, full-time income will be used. This is the case as long as the company will verify full-time status. Lenders want to feel confident that full-time employment is likely to continue via a written verification of employment. The Ability To Repay Mortgage Guidelines apply.
- The W-2s will not be averaged and new full-time income will be used to qualify debt to income ratios
What If I Go From 1099 Income Status To W-2 Income Status
Borrowers who are a 1099 wage earner need two years of 1099 income in order to qualify for a mortgage loan.
- One-year 1099 income may be doable if the mortgage loan application gets an approve/eligible per Freddie Mac Automated Underwriting System or LP FINDINGS
- Freddie Mac does allow one-year 1099 income
- One year tax returns if the mortgage applicant has strong credit and financial profile and AUS Findings only require one year
- Case Scenario:
- Borrowers with a new job as a W-2 wage earner
- Went from 1099 to W2 earner
- This type of borrower will qualify for a mortgage loan based on new W-2 monthly gross income
- May apply for a mortgage loan the day they start a new job
- But cannot close on mortgage loan until they have provided mortgage lender 30 days of paycheck stubs