Mortgage With Short Employment History Lending Guidelines

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Mortgage With Short Employment History Lending Guidelines

This BLOG On Mortgage With Short Employment History Lending Guidelines Was UPDATED On September 5th, 2018

Mortgage With Short Employment History Lending Guidelines

All mortgage lenders require a two year employment history by borrowers.

However, borrowers do not have to be employed by the same employer for the past two years. Borrowers do not have to have two years of continuous employment history from the same employer. They can have gaps in employment in past two years and qualify for mortgage.

  • Mortgage Borrowers with gaps in employment can qualify for home loans
  • For example, lets take a case scenario for simplification:
    • many mortgage loan applicants can take time off work due to going back to school
    • periods of unemployment, periods of taking time off due to medical issues, maternity leave, and other reasons does not disqualify home buyers from qualifying for mortgage
    • Borrowers can also have a series of temporary jobs in the past two years and eventually have a full time job and qualify for mortgage
    • There are situations where borrowers can have several years of unemployment and  go back to working full time and qualify for mortgage
    • What lenders require is an overall two year employment history 

2 Year Employment History

2 Year Employment History

Many borrowers think that in order to qualify for a mortgage they need two years of employment history with the same employer. This is not the case:

  • A solid continuous employment history with the same employer does show stability
  • Most lenders prefer that but it is not a mortgage guidelines that borrowers need to have the same job for past two years
  • However, during tough economic times, many folks change jobs, change careers, and got laid off
  • Or companies they work for shut down and they often need to find other employment
  • The 2 year employment history requirement from lenders is that loan applicant needs to have at least a two year work history
  • For example, lets take a case scenario:
    • if borrower started working full time in April 2015
    • quit his job in April 201(1 year history so far) and did not go back to work until April 2017 (As of April 2018 is another 1 year so two years total of employment history) and is still employed
    • this borrower will qualify for a mortgage loan because he has a two year employment history
    • Borrowers does not have a continuous 2 year employment history
    • Borrower does have an overall 2 year employment history and will qualify for mortgage

Gaps In Employment

Gaps In Employment

There are rules and regulations when it comes to gaps in employment.

  • If loan applicant has gap in employment for six months or less, then they are okay
  • They can qualify for a mortgage loan as long as they have a full time job and provide 30 days paycheck stubs prior to underwriter issuing clear to close
  • They will need to provide 30 days of pay check stubs in  order to close on their home loan
  • If borrower has been unemployed for six or more months, then borrower needs to work in his new job for at least six months in order to qualify for mortgage

Part Time To Full Time Employment

Part Time To Full Time Employment

In order to use part-time income or second full-time income, borrowers needs at least to work on part-time job and/or second full-time job for at least two years.

  • Qualifying for a mortgage with short employment history with part-time job will not work if the borrower does not have a two year part-time income history with the same employer
  • However, if borrower goes from a part-time job position and gets promoted to full-time status, they can qualify for a mortgage as long as the full-time status can be verified through offer employment letter and/or verification of employment

Hourly Income To Salary Income And Job Promotion

Hourly Income To Salary Income And Job Promotion

Many times mortgage loan applicants go from hourly income to salary income due to a job promotion.

  • In cases like this, the borrowers wages will not be averaged
  • The new salary or promotion income will be used to qualify for debt to income ratios
  • Qualifying for mortgage with short employment history may be a problem if the borrower has had a part time job
  • Part time jobs needs to be seasoned for at least two years in order to be used for income by mortgage underwriters
  • Qualifying for mortgage with short employment history is an issue if the part time worker borrower has not been in the same part time job for at least two years

Declining Income In Qualifying Mortgage With Short Employment History

Declining Income In Qualifying Mortgage With Short Employment History

Declining income is an issue when it comes to qualifying for a mortgage loan.  A substantial decline in income can disqualify borrowers from qualifying for a home loan unless there is a good reason.

Home Buyers who need to qualify for mortgage with a direct lender with no mortgage overlays on government and conventional loans, please contact us at Gustan Cho Associates at 262-716-8151 or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

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