Getting a mortgage with a new job or a gap in work

How much work history do lenders want?

Lenders generally look at about the last two years of work and income. That doesn't mean two years at the same job: moving between employers in the same line of work is common and usually fine. For recent graduates, school or training in the same field can help explain a shorter history.

The lender's goal is to document that your income is stable and reasonably expected to continue. They also verify your job again shortly before closing.

I changed jobs in the same line of work. Is that a problem?

Usually not, especially if you're paid a salary or an hourly wage and your base pay stayed the same or went up. Expect to show your offer letter and a recent paystub from the new job, plus W-2s from the past two years. If the new job has a probation period, mention it early so Tom can check how the lender treats it.

What if my pay changed from salary to commission or bonus?

Base pay can usually count right away. Variable pay, such as commission, bonus, overtime or tips, is different: lenders want a history of receiving it before they count it. Fannie Mae recommends two years and may accept as little as 12 months when other strengths offset the shorter history.

Going from a paycheck to self-employment changes things more. Lenders usually look for two years of tax returns, sometimes less if you stayed in the same field. The bank statement loan guide covers another option for business owners.

Can I buy a home with a job offer before I start?

Sometimes. Fannie Mae lets lenders qualify you with a signed, non-contingent offer or contract for a job that starts soon after closing, no later than 90 days after the loan closes, as long as it's not with a family member or someone involved in the sale. Some versions are limited to buying a one-unit home you'll live in and ask you to keep extra savings on hand until your first paycheck.

Not every lender offers this, which is where comparing 45 lenders helps. It often comes up for relocations, new nurses and teachers, and anyone moving to New Hampshire for work.

What about a gap in employment?

A gap isn't a deal breaker. Expect to explain it in a short letter: school, caring for family, a layoff or a health issue are all common reasons.

FHA has a specific rule for longer gaps. After a gap of six months or more, a lender can use your current income if you've been in your current line of work for at least six months and can show two years of work history before the gap. Conventional lenders weigh the whole file, and Tom can tell you how a gap reads before you apply.

Can I change jobs while my loan is in process?

Talk to Tom first. The lender checks your employment again shortly before closing, and a change can delay the loan or change what you qualify for. A raise or a promotion with the same employer usually isn't a problem, but quitting, switching to commission pay or starting a business before closing can be. The after-you-apply guide lists other things to avoid until closing.

What documents help?

• Your signed offer letter, showing your pay and start date
• Your most recent paystubs
• W-2s for the past two years, or tax returns if you're self-employed
• A short letter explaining any gap in work
• A diploma or transcript if you recently finished school or training
• A contact in human resources who can confirm your job

The document checklist covers the rest of what a lender asks for.