Job Change and Mortgage Approval?
How Changing Jobs Impacts Your Mortgage Application
Introduction
Thinking about a new job but also planning to buy a home? You might want to hit the pause button before making a career move. A job change and mortgage application don’t always go hand in hand. Lenders want stability, and a job change can throw a wrench into your mortgage approval process.
But don’t worry—you’re not stuck in your current job forever just because you want to buy a house. Some job changes don’t affect your mortgage, while others might delay or even deny your approval. Let’s break it all down so you can make the right moves before signing that offer letter!
Job Change and Mortgage – What Lenders Look For
When reviewing your mortgage application, lenders prioritize job stability and consistent income. Here’s what they focus on:
- Length of Employment: Lenders prefer at least two years of steady work in the same field.
- Type of Job Change: Moving within the same industry? No problem. Jumping into a completely different field? That could raise red flags.
- Income Type: Salary is predictable; commission and self-employment aren’t. Big changes in income type could cause issues.
Lenders want to ensure you can repay your mortgage without financial instability. So, how does your job change impact approval? Let’s break it down.
How Different Job Changes Affect Mortgage Approval
Positive Job Changes That May Not Hurt Your Mortgage Approval
Not all job changes are deal-breakers! Some could actually improve your chances:
✅ Higher Salary: If you’re making more money, lenders will see it as a positive.
✅ Same Industry: If you stay in the same line of work, lenders view it as continued stability.
✅ Salaried to Salaried: Switching from one salaried role to another? No big deal.
Negative Job Changes That Can Delay or Deny Mortgage Approval
On the flip side, some job changes could cause serious problems:
🚫 Lower Salary: A drop in income might make it harder to qualify for the home you want.
🚫 New Industry: Changing career paths? Lenders may see it as a risk.
🚫 W-2 to Self-Employment: Going from an employee to being your own boss? Expect at least two years of income proof before getting approved.
Self-Employment and Mortgage Approval
Becoming self-employed is exciting—but it makes mortgage approval much harder. Here’s why:
- Lenders require two years of stable income from self-employment.
- You’ll need tax returns, profit and loss statements, and bank statements.
- Write off too many expenses? That lowers your taxable income and could hurt approval chances.
Thinking of going solo? Consider securing your mortgage before quitting your W-2 job.
Job Gaps and Mortgage Applications
If you’ve had a break in employment, lenders will ask questions. They want to see:
- A reasonable explanation for the gap (education, illness, etc.).
- A solid employment history before and after the gap.
A short gap (a few months) may not be a big issue, but a long one without a clear reason? That’s a red flag.
Probation Periods and Your Mortgage
Just started a new job and in a probationary period? This could delay your mortgage. Lenders prefer you to complete probation before finalizing your loan. If your new role has a probation period, talk to your lender early to see how it affects your approval.
Job Change and Mortgage – When to Inform Your Lender
Honesty is the best policy. If you change jobs before closing, tell your lender ASAP. If you hide it and your income verification falls apart, your mortgage could get denied at the last minute.
Strategies to Get a Mortgage After a Job Change
If you recently changed jobs, you can still qualify by:
- Waiting a few months before applying.
- Strengthening your credit score and savings.
- Getting preapproved early to understand your options.
What to Do If Your Mortgage Is Denied Due to a Job Change
If your mortgage is denied, don’t panic. Here’s what to do:
- Ask why it was denied.
- Work on stabilizing income (waiting, getting a raise, etc.).
- Look at alternative mortgage options like bank statement loans.
Final Thoughts – When to Change Jobs If You’re Buying a Home
If possible, wait until after closing to change jobs. But if you must switch, do it strategically. Talk to a mortgage expert before making any big career moves.
Thinking of buying a home? Get preapproved HERE before making any job changes!
Schedule a call with a licensed mortgage pro who can answer your specific questions HERE
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FAQs About Job Changes and Mortgage Applications
1. Can I get a mortgage if I just started a new job?
Yes, but it depends on your income type and stability.
2. What if I change jobs after getting preapproved?
Tell your lender immediately. It may affect your loan.
3. How does switching to commission-based pay impact my mortgage?
Lenders need at least two years of commission income history.
4. What if my new job has a probationary period?
Some lenders may delay your loan until you complete probation.
5. Can I still get a mortgage if I was unemployed for a few months?
It depends on the reason for the gap and your new employment stability.