Should you apply for a mortgage before or after you move to a new state?

By Michael Jensen, Mortgage and Finance Guru

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

Updated October 20, 2020

The answer to your question depends on two factors: 1) if you plan to keep your current residence; and, 2) your employment situation. How these circumstances apply to you dictates if you should apply for the mortgage now or wait until after you move to the new state.

If you want to apply for the loan before you move, we recommend that you make the final approval for the mortgage on your new home conditional on selling your current home or ending your current lease.  This is no different than when you buy a new home and need to sell your existing home to fund your down payment or qualify for the loan.

Otherwise the monthly housing expense -- your rent or mortgage payment, property tax and homeowners insurance -- for your current residence is included in your debt-to-income ratio when you apply for the new mortgage.  Including the housing payments for two properties -- the home you currently live in in plus the home in the new state -- in your loan application can make it more challenging to qualify for a mortgage.

If possible, we recommend that you close your new mortgage and home purchase simultaneous to your move.  For example, if you intend to move to the new state on June 1, have your mortgage and home purchase close on June 1.

In this scenario, lenders only include the housing expenses for your new home in your loan application, which makes it easier to get approved for a mortgage. In short, you only need to demonstrate that you can afford the monthly payment for one home instead of two.

Use ourHOW MUCH HOME CAN I AFFORD CALCULATORto determine what price home you can buy based on your monthly gross income and debt expense

The downside to this approach is that your mortgage does not close until you move out of or sell your current home. This can potentially delay the closing process depending on market conditions and other factors. While this is not really an issue if you are renting, if you fail to sell your current home, your new mortgage may not be approved. 

You can also wait until you move to the new state before you apply for the mortgage.  In this case you do not need to worry about the lender including multiple housing payments in your loan application. This is why it may be a little less complicated to apply for the mortgage after you move.

The table below shows mortgage terms for leading lenders. We recommend that you contact multiple lenders to confirm their qualification guidelines. Comparing lenders also enables you to find the mortgage with the lowest rate and fees.

Your employment situation is the other point to consider when deciding when you should apply for the mortgage. If you are being transferred to a new state for work and there are no significant changes to your job including your type of employment, income level and how you are paid, then you do not need to wait to apply for the loan.

If you are starting a new job and the position has a probationary or trial period then you typically need to wait until this period ends before you are eligible for a mortgage. You may also need to wait if your income, type of compensation or employment terms change.

For example, if you go from being a regular W-2 employee to self-employed or a contractor that receives a 1099, then you may need to wait at least a year before you apply for the mortgage. The same guideline applies if you were paid on a salary or hourly basis and are now paid primarily through commissions or bonuses.

Additionally, if you are relocating to a new state without a job lined up then you usually need to wait until you employed on a full-time basis before you can qualify for a mortgage.

The final option to consider is to wait until you move before you apply but get pre-approved in your new state. This enables you to identify and address potential issues with your application and shop for a home with more certainty. Getting pre-approved can also make you a more attractive buyer to home sellers and streamline the process when you submit your mortgage application.

Use our get pre-approved form to get approved for your loan by top-rated lenders. Our form is free, no-obligation and does not affect your credit.