The short answer to your question is that it is definitely possible to get a mortgage if you changed jobs recently. In fact, for many applicants, changing jobs should not impact your loan application at all and may even help you qualify if you earn more money at your new job.
There are several points to focus on to determine how switching jobs affects your mortgage application, including if your type of employment or how your are paid changes. Below we review multiple job change scenarios so you can understand the ramifications of each.
New job in same line of work with same type of compensation. From the lender’s standpoint, in an ideal scenario, when you change jobs, your new job is in a similar line of work as your old job and your type of employment remains the same.
For example, if you were a W-2 employee (salaried or hourly wages) in the retail industry in your old job, then your new job is also in the retail sector and you are paid the same way, but hopefully make more money. A job change that finds you in a similar line of work with the same compensation structure should have little-to-no impact on your ability to qualify for a mortgage.
New job in different line of work with same type of compensation. If your job switch also involves changing the field in which you work -- for example you move from the retail industry to the information technology field -- this may cause some lenders to take pause but should also have minimal impact on your loan application.
Some lenders like to see a certain length of job experience for borrowers that recently changed their line of work. This is relatively unusual, however, as most lenders are fine as long as you can verify your new employment and your compensation structure is the same.
New self-employed job. If you switch from being a salaried employee to self-employed when you change jobs, this can create issue when you apply for a mortgage. The qualification and documentation requirements for self-employed applicants are usually more challenging.
Lenders usually require a two year employment history for self-employed borrowers although a work history of between one and two years may be permitted under certain circumstances. In this scenario, it can be helpful if you remain in the same industry and earn a similar level of income. In short, if you are self-employed, you may need to wait before you can apply for a mortgage, depending on your individual circumstances.
Review Employment History Requirements for a Mortgage
New job with a different type of compensation. If you move from a job where the majority of your compensation is salary or hourly wages to a job where the majority of your compensation is from a bonus or commissions, this can also make it more challenging to qualify for a mortgage.
For example, if you take a new job as a salesperson and earn most of your income from commissions, lender guidelines usually require a one-to-two year job history for commission income to be included in your loan application, even if you are making more money at your new job. This is another example of when you may be required to wait to apply for a mortgage after changing jobs.
Your new job has a trial or probationary period. Some new jobs have an initial trial or probationary period before the position becomes permanent. For example, your new position may have a six month trial period to make sure that you can successfully perform your job responsibilities. Most lenders require that the trial or probationary period has ended before you are eligible for a mortgage.
You have a gap in between jobs. Many people incur a brief gap in their employment when they change jobs. A break of less than a month should not cause any issues for applicants. An employment gap of longer than one month but less than six months is usually permissible as long as you provide a written explanation for the break.
Gaps in your employment of longer than six months are also allowed if you have been back to work for at least six months and have a two year work history prior to the break. So depending on the length of the gap and when you started your new job, you may need to wait before you can apply for the loan.
Please note that military service and full-time education such as college or vocational school are usually considered employment when you apply for a mortgage. So if your employment gap was due to military duty or school, then the break should not affect your application.
To summarize, a job change usually does not negatively affect your ability to qualify for a mortgage but there are multiple scenarios that may require you to wait before you can apply. Because many borrowers change jobs so that they can make more money to afford a mortgage and buy a home, we recommend that you consult multiple lenders in the table below to understand the specific guidelines that apply to you.
"B3-3.5-01, Income and Employment Documentation for DU." Selling Guide: Fannie Mae Single Family. Fannie Mae, August 7 2019. Web.« Return to Q&A Home About the author