Does what type of job you have affect your ability to qualify for a mortgage?

By Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience

Edited by Michael Jensen, Mortgage and Finance Guru

Updated October 20, 2020

In short, what type of job you have does not really impact your ability to get approved for a mortgage but your type of employment does. If that sounds a little confusing, continue reading to learn more about this important qualification guideline.

If you are employed as a full-time, W-2 employee and paid on a salary or hourly wage basis, then what type of job you have should not affect your ability to qualify for a mortgage. For example, working for a stable employer like a government agency does not provide an advantage when you apply for the loan as compared to working for a company in the private sector.

As long as you meet the lender’s employment history requirement -- which is typically two years but potentially shorter for applicants with positive supporting factors such as a high credit score, low debt-to-income ratio or significant financial reserves -- you should be able to qualify for the mortgage. Lenders are more focused on how long you have been employed, the source and stability of your income and how you are paid than the specific job you hold.

Use ourMORTGAGE QUALIFICATION CALCULATORto determine the mortgage you can afford based on your income and monthly debt expense

Your type of employment, however, can affect your mortgage eligibility. By this we mean if you are self-employed or a 1099 contractor, it can be more challenging for you to qualify for a mortgage.

Applicants that fall into these categories may be required to demonstrate a full two year work history as evidenced by your tax returns. If you own your own business you may also be required to provide a profit and loss statement and tax returns for the business. In short, getting approved for a mortgage if you are self-employed usually requires more documentation as well as time and effort.

Review How to Get a Mortgage if You Are Self-Employed

How you are paid is also an important factor that lenders review when you submit your loan application. While lenders usually treat salary income and hourly wages the same regardless of your job, if you are paid primarily through commissions or bonuses you may be required to wait longer before you are eligible for a mortgage, unless you already have a two history of earning that type of income.

Lenders typically average commission or bonus income over the prior twelve or twenty four months to calculate your monthly gross income and then use this figure to determine the mortgage you qualify for. This is a different approach than if you are paid on a salary or hourly basis and the lender reviews your pay stubs for the prior two months to confirm your income.

In closing, lenders review multiple factors regarding your job when you apply for a mortgage, including how long you have worked, your type of employment and how you are paid. Job history and income documentation requirements for a mortgage may vary by lender and loan program and may also be different depending on how you are employed and compensated.

The table below shows mortgage terms for top-rated lenders in your area. We recommend that you contact multiple lenders to confirm their qualification guidelines based on your current job. Shopping for a mortgage also enables you to find the best loan terms.

"B3-3.5-01, Income and Employment Documentation for DU."  Selling Guide: Fannie Mae Single Family.  Fannie Mae, August 7 2019.  Web.