When you apply for a mortgage you are typically required to have a continuous two year employment history to qualify. So what happens if you took several years off from work to raise a child?
The good news is that it is still possible to qualify for a mortgage with an extended break in your job history but you need to satisfy certain requirements. Employment gaps of over six months are permitted as long as you have a two year work history prior to the break and you have been back to work for at least six months.
For example, if you worked for five years and then took three years off to raise a child, you can get approved for a mortgage as long as you have been continuously employed for at least six months since you returned to the workforce. Please note that while this mortgage guideline was designed to address parents who take time off to raise children, it applies to any applicant who has an extended employment break, regardless of the reason.
Use ourMORTGAGE QUALIFICATION CALCULATORto determine the loan you qualify for based on your current income and debt expense
There are several additional points to keep in mind if you are thinking about applying for a mortgage with a significant gap in between jobs.
First, if your current job has a probationary or trial period, you are typically required to wait until that period expires before you can qualify for the loan. Lenders want to make sure that your employment and income are as permanent and stable as possible so you can make your monthly payment and repay the mortgage.
Second, the type of job you have and how you are paid are additional considerations. If you return to work and are self-employed, you may be required to wait one-to-two years before you are eligible for a mortgage as opposed to only six months. In short, the qualification threshold is higher for self-employed applicants.
Additionally, if your compensation is primarily from commissions or a bonus instead from hourly wages or a salary, you may be required to wait up to a year before you are eligible for a mortgage. Lenders require a longer employment history for less consistent or proven income sources.
Finally, you should expect your lender to verify your current employment in writing when you submit your mortgage application and potentially again verbally prior to your loan closing. Lenders are required to confirm your job status before providing final mortgage approval.
In closing, taking significant time off from work to raise a child should not prevent you from getting a mortgage. As long as you have been back on the job for at least six months and meet the other employment requirements you should be well positioned to get approved.
The table below shows mortgage terms for leading lenders in your area. We recommend that you contact multiple lenders to confirm their employment history requirement and to find the best loan terms. Shopping lenders is the best way to save money on your mortgage.
"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