If you move to a new city should you wait until you have a job before you apply for a mortgage?

By Michael Jensen, Mortgage and Finance Guru

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

Updated October 20, 2020

The short answer to your question is that it is very challenging to qualify for a mortgage if you do not have a job. You could have enough funds for your down payment and a high credit score but it you are not currently employed you are unlikely to be approved for a mortgage.

From the lender’s standpoint, if you are not working you may struggle to pay your mortgage plus other expenses such as property tax and homeowners insurance. To qualify for a mortgage you are required to demonstrate the ability to afford your monthly payment and repay the loan which may be impossible if you are not earning income.

So if you move to a new city, we highly recommend that you wait until you are employed before you apply for a mortgage in your new town. The good news is that you may not have to wait too long.

As long as you have a two year employment history, most lenders only require one month of pay stubs from your new job to qualify for a mortgage. Please note that full-time education such as college or military service count as employment experience when you apply for a mortgage.

Review Employment History Requirement for a Mortgage

Additionally, if moving to the new city caused a break in your employment, that should not create an issue as long as the gap is less than six months and you provide a letter of explanation to the lender. It can also be helpful if your new job is in a similar field of work as your prior job.

We should highlight that your type of employment and how you are paid are also important considerations. If you go from being a W-2 employee to self-employed or a contract worker, you may be required to wait one-to-two years before you can qualify for a mortgage, depending on the lender and loan program.

Additionally, if you go from being paid on a salary or hourly basis to being paid primarily via bonus or commissions, you may also be required to wait before you apply for a mortgage.

Use ourMORTGAGE QUALIFICATION CALCULATORto determine what size mortgage you can afford

Finally, if your new job has a probationary or trial period, most lenders require that you wait until this period is over before you submit your mortgage application. Lenders need to confirm that your income is expected to continue for at least three years so your job status and position should be permanent.

If these circumstances do not apply to you then there is nothing that prevents you from applying for a mortgage as soon as you land a new job in your new city, after you have a month of pay stubs. As long as your new income enables you to afford the monthly payment, you should be in a great position to qualify for a mortgage.

The table below shows mortgage terms for leading lenders in your area. We recommend that you contact multiple lenders to confirm their qualification requirements. Shopping lenders is also the best way to save money on your mortgage.

Sources

"B3-3.1-02, Standards for Employment Documentation."  Selling Guide: Fannie Mae Single Family.  Fannie Mae, October 24 2016.  Web.