Considering changing jobs, but curious how that might affect the mortgage approval you’re hoping for? Or, maybe you already have a new job and are wondering what your odds are. The general rule of thumb is that you should have a two-year history at your current job, but this is far from necessary in all cases. However obvious it may seem, the main question you need to ask yourself is: Can I prove that I can afford the expected mortgage payments? A close second question to consider is: Does this job move make sense on paper? Here are three things mortgage lenders take into account:
1. Changes to Income Structure
It’s much easier to show that you can meet expected payments when you’re being paid a guaranteed salary that exceeds the amount of payment needed. Where people often run into trouble is when they are moving to a new job where they will be making the same or less money guaranteed, but counting on bonuses or commissions for the rest .
2. W-2 or 1099?
If you’ll be working for yourself in your new role or working for someone else as a contractor (1099 as opposed to W-2), you will need to show at least 12 months of self-employment income before most lenders will approve your mortgage application.
3. Whether Job is in a New Industry
The gold standard in being approved for a mortgage with a new job is when an applicant works in the same industry for more pay. But what if your new job is in a completely new industry? For example, what if you were working as a bartender, but now you’re going to be employed as a pharmacist? Sometimes, these situations make sense. For example, in careers that require higher level education (think doctor, lawyer, etc.), lenders will expect to see such an abrupt change. If, however, you’re going to be a dog walker after having been a barber, you’re going to have more work to do. If your new job will offer you a written employment contract for at least one year, you’re going to have a much easier time convincing a lender you will be able to meet your expected payment. If it’s unlikely that you’ll be offered such a contract in your new role, you’re better off getting approved for a mortgage first before taking a job in a new industry.
Getting approved for a mortgage with a recent job change is well within your reach, as long as you go about it the right way. When in doubt, hold off on the new job change until you can secure the mortgage that’s right for you.