How long do you have to wait after you get a job after being unemployed before you can apply for a mortgage?
The answer to your question depends on how long you were unemployed, how long you were working before you lost your job and how long you have been at your current job.
Lenders typically require a one-to-two year employment history to qualify for a mortgage. So the first guideline you need to meet is that you worked for the required period of time before you became unemployed. Please note that full-time education such as college and military service count as employment when you apply for a mortgage.
The second point to consider is the length of time you did not have a job. Lenders usually permit a gap in your employment of up to six months as long as you can explain why you did not have a job. So if you were out of work for six months or less, you should be able to qualify for a mortgage. If you were out of work for longer than six months, you may need to be employed for a longer period of time following the break before you can apply for the loan.
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We should highlight that you may be required to provide a letter of explanation that details why you were not employed and the steps you took to find a job. The lender includes this letter in your mortgage application as part of your employment history.
Another requirement you need to meet is that you have been employed at your current job for a certain period of time. The length of time you are required to be back at work depends on the amount of time you were unemployed.
For example, if you were out of work for a relatively short period of time and your new job is generally in the same line of work as your old job, then you should be able to qualify for a mortgage after returning to work for only one month. In this case lenders typically require two pay stubs from your new job to verify your current income.
If you were unemployed for a longer period of time, such as six months, then you are usually required to be back at work for a longer period of time -- in some cases for up to six months -- before you can apply for the loan. Because this requirement may vary depending on how long you were unemployed and your loan program, it is important to confirm this guideline with your lender before you apply for the mortgage.
The table below shows mortgage terms for leading lenders in your area. We recommend that you contact multiple lenders to confirm their qualification guidelines.
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Another point that you should keep in mind is that if your new job includes a probationary or trial period, you are usually required to wait until the period expires before you can apply for a mortgage. Lenders want to make sure that your new job is permanent and that your income is steady.
The final consideration is if your type of employment or compensation changed with your new job. If you went from being a W-2 employee to self-employed or a contractor who files a 1099, then you may be required to wait two years before you apply for a mortgage, depending on the loan program.
Additionally, if you were previously paid on an hourly or salary basis and your new job pays you primarily through commissions or a bonus, you may also be required to wait before you can qualify for a mortgage.
In conclusion, being unemployed for a certain period of time does not mean you cannot get approved for a mortgage. As long as your employment break was less than six months, you have been back to work for the required amount of time and your overall job details did not change, you should be able to qualify for the loan.
Sources
"B3-3.5-01, Income and Employment Documentation for DU." Selling Guide: Fannie Mae Single Family. Fannie Mae, August 7 2019. Web.
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