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 30 Comments

  1. I worked as a substitute teacher part time and as a factory laborer full-time. I was preapproved and changed my mind about purchasing at the time.

    A few months later, my job situation flipped. I’m a full-time salaried teacher (making much more than at the factory) and I still work in the factory part-time (1-2 days a week).

    Is that considered a change of fields since I’ve just flipped which job is part or full-time?

    1. Nicholas:

      I’m going to put you in touch with someone that can answer your question about whether it’s considered a change of fields. If you were to tell your lender, they would probably consider you to be in a much better situation now as you’re making a lot more money and working full-time, so I don’t think it would be an issue. That said, I’m going to have someone reach out and answer your question.

      Thanks,
      Kevin

  2. My husband and I are moving out of state and he will be taking on a new job which will give him VOE however, He’s a barber and that’s self employment which goes off of bank statements and tax returns. Will we have to wait 2 years before qualifying for a mortgage or are there any wholesale programs available to help us?

    Thanks

    1. Hi there:

      Every situation is different. We would be happy to look into your options with you. A Home Loan Expert will be reaching out.

      Thanks,
      Kevin Graham

  3. Hey,

    So I am in a very interesting situation. I currently have been working for the same company for over 2 1/2 years, and I’m about to take a new position in the same field, but with a different company. I want to know if it going to be possible to purchase a new home with this circumstances. My medium credit score is over 620 and I found a house I really want and my IDR is about only 19%. In addition: I collect $515.00 in V.A benefits that will contribute to the home I want to purchase as well.

    So to slim it up.
    – Credit Score of 635
    – IDR of 19%
    – I am able to get pre-approved for a RD or VA Loan (I have the eligibility Form from the V.A already)
    – Changing companies in about 4 weeks
    – The advisor I talk to from a Loan mortgage company said I should wait……. Till I’m done with a probation period (its 3 months- into the Union) and then I should try.
    – My longest form of credit is over 2 years old. With 4 lines all over 6 months with NO LATE PAYMENTS.

    Need help or a direction into a mortgage company that can help me out….

    1. Hi Tim:

      I can put you in touch with a Home Loan Expert they can look into your options and see if there’s anything we can do to help you. Have a great day and thank you for your service!

      Thanks,
      Kevin Graham

  4. My fiance and I got pre-approved for a loan on a new mobile home, which will be delivered mid-January. I have a new part-time job opportunity, which will allow me to become part-time at my current full-time job, which my pre-approval was based off of. I would not be going PT at my current job until right at the same time the home is delivered, mid-January. Would the loan officer find kinks with this? If I asked him about this, I’m afraid he will have second thoughts about even the approval. I am wondering if asking him to close on the loan now, before the home arrives, would raise red flags with him or is that a common thing to do? That way, I should be clear to change up my job status, right?

    1. The best thing to do is just be honest with him. Only your loan officer can tell you about the particular policies of that lender. If your income isn’t changing, there’s a good chance it won’t have an effect, but the preapproval is based quite a bit on your income, so it could have an effect if that is changing. Talk to him, and he will be able to guide you.

  5. Hi, just wanted to know i have already put an application for a mortgage based on my current job salary…..the survey will carried out next week and i am starting my new job in january…what can i do now ?

    1. Hey Ayrin:

      If you’ve been preapproved and you changed jobs, I would let your mortgage company know right away. If the job is in the same field with the same or higher salary, you’ll probably be fine. Definitely let them know, though.

      Thanks,
      Kevin Graham

  6. Hi. I am looking at changing jobs but not a career. I am a nurse who would be switching hospitals in the Boston area. I have been at my current hospital for 3 years. My boyfriend and I are also looking to buy a house when our current lease is up in 6 months. In this time, I could potentially be hire and still be under a probationary period at the time of purchase. The pay rate should not change drastically. How could all this affect us with going forth on the purchase of our first home. Thank you.

    1. Hi Molly-

      In general, probationary periods make it harder to get approved for a mortgage, but every situation is different. I’m going to connect you with a Home Loan Expert who can look into your circumstances more thoroughly.

      Thanks,
      Kevin Graham

  7. Hello,
    I am currently paying a few things off before I attempt to get preapproved for a home loan. I’ve been with my company for 7 yrs ( 8 yrs in April) but I want to move on to a new company doing a similar job with probably same ball park salary if not more. Would now be a bad time to move on to a new company or should I stay with my current employer. Again i have not started the process i’ve only sat down with a lender just to see what I need to fix but no paperwork.

    1. Good morning, J Little. Yes, changing jobs can throw a wrench in the loan process, but there are exceptions for people who are starting a career in a similar field. The best thing you can do is speak with a lender about your situation and ask about their requirements. And when you’re ready to start the process, Quicken Loans would be happy to help. Best of luck to you, J.

  8. Hello, we will be relocating the end of the year for new positions. Both of our incomes will be an increase from current. My husband has only been working part time while he was in school, and I have been working part time as well while in school. Our income is going to rise significantly, mine being a salaried position, his an hourly. I will be going from an RN to a nurse practitioner. Will this affect us getting a loan? Prior to starting clinical for school I was working full time for many years, but had to cut back due to school demands. Thank you

    1. Good morning, Jennifer! There are a few variables that need to be considered, so I’m going to have a home loan expert reach out to you with an email. They’ll take a deeper look at your situation and point you in the best direction. Thanks for the comment!

  9. Hi- I am being recruited by a competitive company, same industry to join a similar job title but with higher pay. The pay structure is the same 60% salary and 40% commissions. Same pay structure of being paid out monthly from commissions. I have been in the same title and industry for 2+ years now. Will the change make me lose my commission calculation in my loan gross income per month? Thank you

    1. Hey, Thomas! Kim just had a similar question. The short answer is that it’s complicated. We need to look into some of your state’s standards, as well as your type of loan. Please call one of our specialists at 800-863-4332.

  10. Hi, we were just approved for a loan in Louisiana but have now accepted a job In Georgia. The job is in same field I have been in for 10 years and pay about the same. I make salary plus commission. Will I be able to get a loan relocating and starting new job? I really don’t want to wait another 2 years to buy! I did have a few mos of unemployment while we were looking for new work but we had plenty of savings and still do.
    Thanks!

    1. Hello, Kim! Thate are many factors that go into that (like state-specific guidelines and program guidelines). If you want to speak to one of our specialists, please call 800-863-4332. They can take a look at your specific situation. Have a good one, Kim!

  11. Hi we recently got preapproved for our home loan. I work seasonally so I get laid off mod september. We put in an offer on a house and they accepted. The loan officer knew about the unemployment coming up. I asked him if it’s going to be an issue me being laid off soon and he said it might be. We are waiting for answers from USDA monday. Would this disqualify me from getting the loan?

    1. Good morning, Scott. I’m sorry to hear you were laid off. Yes, typically, having proof of employment is an essential part of closing a loan. I recommend waiting on answers from the USDA and your loan officer. If you have any questions about their explanation, please let us know.

  12. I am building a house and have been with my job for several years. I have been approved for the home loan already. My question is my job is looking to put our whole department on a salary of approximately 100,000 year. Would this be something to worry about making the mortgage company backing out of giving me the loan.

    1. Good afternoon, Kody. The change in your pay could affect your ability to be approved for the mortgage. It would depend on several factors and your whole financial profile. I suggest you talk to the mortgage company you are working with. It is better to find out in the early stages whether this will affect your qualification, rather than it being caught at the end.

  13. My husband and I haven’t applied for a loan yet, but we are in the middle of paying all debt but the car, then saving our 3.5-5% down payment for the home. We would be first time home owners. June of 2016 we want to apply for the loan, so that we can move out August 2016 when our apartment yearly contract expires. By then we will have had 3 years in the same apartment and 2 years each in the same jobs. My concern is that we’re missing family a lot and don’t have anybody really here in this state so we’re considering going back to the state where our family is, halfway across the country. Assuming we get jobs where we get paid the same (the cost of living is higher there), I’m worried that if we don’t have 2 years at the same job they’ll deny us. Also, I don’t know if we have the option of just selecting a home in this state or can we get approved and select a home in the other state? Will this mess things up?

    1. Hi Kathleen! Thanks for reaching out! I’ve passed your comment on to our team of home loan experts. They’ll reach out to you to discuss your situation in more detail and see what your best options are.

  14. My husband is getting his PhD in August and we are moving to his new job in September. We are looking to buy our first home in our new city right before we move down there. I currently work, and he has an income as a grad student. After we move, I will not work and he will make about the same as we make now combined. I have been at this job for 1 year and my previous job for 3 years. He has been a graduate student with income for 6 years. Trying to think about how all of this might affect our preapproval in light of this article….

    1. Hi Teresa! I’ve sent this over to our home loan experts who will reach out to discuss your situation and your options.

  15. I was recently approved for a home loan, our offer for a house was accepted and now we are just waiting for the appraisal to finish and for them to install the sprinkler system that we requested in the contract, would this be a bad time to give my two weeks? Our closing date is 5/15/15 so only one week away. My major concern is that my current boss has a temp and might let me go as soon as I put in my notice. I could of course start my new, better paying salaried job right away but what if we don’t have the keys in our hands? Does everything have to be re-evaluated? I Know I’m impatient and should probably wait until we have the keys to put in my 2 weeks right? Thanks for the help!

    1. Hi Nicole! Your qualifications for your loan are based on your current income and employment. Any changes could affect the closing of the loan. But I’ll pass you question on to one of our home loan experts who will reach out o you with more specific information.

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