Mortgage Missteps: Changing JobsThat’s the long and short of it. Changing your job while applying for a mortgage is a big mistake that’ll land you in a metaphorical mortgage morass. That’s not to say that taking a new job will automatically disqualify you from getting a mortgage, just know that it’s a big red flag for mortgage lenders.

When considering a loan, underwriters look at, among many other things, three different aspects of your income – the amount, the history and the stability. The majority of loans require a two-year work history, and underwriters need to be able to document any employment gaps or changes in income.

To verify your employment, you usually have to provide your lender with pay stubs and sometimes a written verification of employment (VOE).

Jim Woodworth, a mortgage specialist team captain here at Quicken Loans, explains this further:

“The biggest issue that we see with changes in employment is when a change in pay structure occurs. For example, someone that goes from a salaried position to a commissioned position will encounter some obstacles with applying for a loan, even if the new job results in higher income.”

Your income helps decide how much loan you qualify for, and, if your income changes, then the lender has to reevaluate everything. Switching jobs causes an especially big problem if you take a new job at the end of the year because it will mess up your tax info and W-2s as well. Also, a significant time gap between jobs could be a problem because your income won’t look very stable.

Generally speaking, if you immediately switch from one job to another within your same field and get equal or higher pay, that’s not going to be much of a problem. But, if you start in a new career field or take a lower paying job, you’ll have a harder time getting your loan approved.

The bottom line is that your lender just wants to make sure you have a reliable income so you’ll be able to pay your mortgage every month.

If you have more questions on this topic or some suggestions of your own, let us know!

Here are some other Mortgage Missteps that you should be aware of:

Not Seasoning Your Assets

Not Checking Your Credit Score

Not Understanding the Language

The Too-Good-to-Be-True Deal

Opening (or Closing) a Line of Credit

 

 

This Post Has 56 Comments

  1. I just recently sold my bread route where i was misclassified and recieved a w2. there has been a lawsuit brought to the bakery becasue of the classification. I was completely commission based. I bought a new route with snyderlance co. and am now 1099 . Im still completely commision based. What can i do to get into my first home. I was with flowers bakery for 7 yrs.

    1. Hi Ronnie:

      I’m going to have someone reach out and see what we can do to get you into a loan. A Home Loan Expert can help you go over any options you may have.

      Thanks,
      Kevin Graham

  2. Great article to read, Thanks. I was living in CA working for the same company for over 7 years (cell phone store) was getting paid hr+commission and bonus, I moved to TX and have been at this job for about 1 year and 4 months (Owner financed Home sales) i also get paid hr+commission+bonus, i know its a different field but my job is very stable, i got denied by my bank BOFA because of the work history. I am very stable at my job, luckily i am very good at selling always being #1 in sales so my job is very stable and the company has been in business over 30 years. I was also looking at the Texas First Time Homebuyer Program (bond program 77) Please let me know if its something you guys could help. thanks.

    1. Hi Jonathan:

      I can’t say I’m familiar with that particular program, but we’d be happy to have someone reach out and help you look into your options so you know where you stand. They’ll be in contact.

      Thanks,
      Kevin Graham

  3. My husband and I are interested in buying a house 150 miles frm where we currently live. Our cost of living will decline by 50% but as will my husbands salary. He plans on telling his job he is leaving but was going to wait until we were approved for the mortgage. I realize its better to be upfront but will the loan underwriter realize our expenses will be dropping significantly and therefore his change of jobs and decrease in pay will more than suffice for our cost of living? I just don’t want to be denied a mortgage because my husband is leaving a job of 10+ years to a new industry and lower paying job. We both have excellent credit and high cash reserves.

    1. Hi Sarah:

      It’s probably better to be upfront. In terms of whether it’s likely to affect your approval status, every situation is different. I’m going to forward this to a Home Loan Expert so you can get their thoughts.

      Thanks,
      Kevin Graham

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