Getting a mortgage with a new job: What to know

Hitting a life milestone is exciting, like getting your ideal job at your dream company. However, it can get complicated when you find your forever house at the same time.

Getting a mortgage with a new job can be complex, but there are some steps you can take to help your chances of a successful mortgage approval.

Can you get a mortgage with a new job?

Mortgage lenders like to see a 2-year history in your current job position. However, it’s possible to be given the green light without that 2-year history if you’re transferring into a new role.

We recommend you discuss your job situation with your lender before starting your loan application. Provide your lender with as much physical proof as you can to provide qualifications for approval.

What to do if you’re changing jobs while buying a house

There will be extra steps you need to take if you’re thinking about switching jobs while house hunting. If possible, it’s best to wait a while after closing on your home to change jobs, but life changes can happen suddenly.

Items to present to your lender

If you do find yourself changing jobs while buying a home, having the right documentation can make a difference. Here are some things to consider having on hand to increase your loan approval odds:

• Offer or title change letter: Present a letter of intent from your new employer if you just got a new job. Present a title change letter if you’re staying at the same company but are being promoted.
• Verification of employment (VOE): Similar to an offer letter, your lender may require a verbal or written VOE from your new employer.
• Most recent pay stub: Have your most recent pay stub on hand to show evidence of current employment.

Switching Jjobs during or after the closing process

Discuss with your lender if you plan to switch jobs while finalizing your home loan. They need to know you can show proof of stable income before approving your home loan. There’s less risk of loan delay if your new job is in the same industry and has a similar or improved salary.

Most lenders conduct a verification of employment within 10 days before your loan closes, during which your current employer will be contacted to verify your employment.

How mortgage lenders consider different types of income

The way lenders view your income and job title changes can impact your ability to get a mortgage with a new job. Here’s a breakdown of how lenders evaluate different payment structures.

Annual salary

If you earn an annual salary, it’s easier for lenders to determine your ability to repay your loan – especially if you’ve been employed for 2 or more years. This is the easiest, but not the only, type of income for lenders to verify with pay stubs and W-2s.

Switching from one salaried job to another can also make verifying your income easier. Providing a pay stub from your new job is ideal for the best chance of approval. For most loan types, lenders want to know if your employment is likely to continue for 3 years.

However, if you're relocating for a job, it might not be possible to provide a pay stub. Depending on your lender, they may ask for a VOE letter or additional documentation.

Bonuses

When underwriting mortgages, lenders are looking for consistency. That’s why bonus income is a bit trickier. Since bonus income isn't always consistent, your lender may need to verify the average bonus you can expect to receive and how it’s structured.

If your new job is offering a consistent bonus as a percentage of your salary, that’s something lenders can verify. They could ask you to provide certain documentation from your new employer, like a VOE letter, offer letter or employment contract. Your chances of approval may increase if your bonuses trend upward over time.

Hourly wages

For hourly wages, your mortgage lender will want to verify both your hourly wage and the number of hours you work. This can usually be achieved by providing pay stubs and previous W-2s.

If your hours aren’t consistent or you make overtime pay, your lender will likely average your income over the last few years to get a better estimate. If you’re switching jobs, this will likely entail paperwork similar to other types of income, like a VOE or offer letter.

Commission

Since commissioned wages can change over time, your mortgage lender will want to verify the past 2 years of your wages. They’ll also want to see that this income is steady or trending upward.

Applying for a mortgage with a new commission-based job can be tricky. If you’re making both a salary and commission, qualifying based solely on your salary could make things easier. That said, in this scenario, you should speak to your lender about the best course of action.

Job title changes

Whether you're changing jobs entirely or changing titles at your company, lenders will likely need details on your new position. Changes viewed as positive and consistent are least likely to negatively affect your mortgage.

If you're staying with the same company, but recently got a raise or new job title, this could be viewed positively by lenders. Likewise, a more senior position at a new company in the same industry may be viewed favorably with proper paperwork.

Lenders may take a closer look at any change, especially less traditional changes. Changing industries, multiple recent job changes or a change in payment structure could hurt your chances of being approved. 

Additional mortgage qualification factors

Employment isn’t the only compensating factor that weighs into successfully qualifying for a mortgage, although in most cases you’ll need to provide proof of at least 2 years of employment.

Here’s a list of other factors that your lender will take into consideration:

• Healthy credit score
• Low debt-to-income ratio (DTI)
• Robust cash savings
• Investments or assets
• Down payment percentage

Depending on the loan type, each category will have different qualifications. Whether you apply for a conventional or government loan program, you’ll want to have a strong financial profile. That said, some loan types may be easier to qualify for than others.

FAQs: Applying for a mortgage with a new job

Here are some frequently asked questions to consider.

Can I get a mortgage without a job?

You can receive a home loan if you’re unemployed. There are extra steps you’ll need to take to improve your chances of approval. Be prepared to document other consistent sources you have such as alimony payments, child support, rental property income, etc. You can also leverage liquid assets as an additional source of income.

For details on your specific scenario, we recommend talking to one of our Home Loan Experts. You can also use our mortgage calculator to get an estimate of your monthly payment.

Can I get a mortgage with a part-time job?

You can be approved for a mortgage with a part-time job or seasonal work as your main source of income. Your lender may not require you to show 2 years of work history, but you do need to gather enough evidence to show you’ll have a long-term flow of income.

This evidence can include a history of employment and the number of hours you work per week. You should confirm with your lender you’ll be able to qualify for a mortgage with a part-time job, as each lender handles those circumstances differently.

Can I quit my job before the closing process is over?

It’s possible your lender will not approve your mortgage loan if you quit your job before closing on your house. It can hurt your mortgage approval if you don’t have proof of stable income to make monthly payments.

There’s less risk if you choose to quit a part-time job as long as the job isn’t the income stream you’re using for your loan qualification. We recommend avoiding changing jobs before your home loan closes to avoid putting your loan at risk. If you do end up changing jobs, you must let your lender know so they can verify your new income.

The bottom line

Although it’s possible for borrowers to qualify for a mortgage with a new job, you might find the home buying process slightly more complicated depending on your lender’s requirements. It’s likely you’ll need to provide your lender with additional paperwork, including your employer’s offer or title change letter, verification of employment and your most recent pay stub.

Regardless of your current employment situation, it’s a good idea to meet with your lender early on to discuss what you’ll need and the steps you should take.

Are you about to embark on your home buying journey? Take action and start the mortgage approval process with the Home Loan Experts at Rocket Mortgage^®.