Can I qualify if I just changed jobs?
More often than not, the answer is "yes," but the devil is in the details. When you apply for a mortgage, we ask you for a two-year employment history, and in an ideal world, those two years would be with the same employer. However, expecting that of every loan applicant is not realistic, so loan guidelines allow us to examine other factors if you recently changed jobs.
For a lender, it's important to verify the income used for qualifying is reasonably likely to continue. Frequent jobs changes may raise questions about the stability of that income. Generally speaking, lenders will ask questions if the changes are not associated with career advancement as evidenced by increased income, benefits, and/or responsibilities.
As I said, the devil is in the details, and loan guidelines recognize other reasons for changing jobs.
- When one spouse is relocated, the other spouse often has to change jobs. Lenders usually will treat the other spouse's income as qualifying income as long as the new job is in the same profession.
- Individuals who work for temporary employment agencies or in union trades may move between companies frequently with small gaps between assignments. Lenders generally will treat this as stable, qualifying income.
- Similarly, folks who work in seasonal jobs, such as agricultural workers, may have frequent jobs changes. As long as the loan application shows a history of this type of employment, lenders generally will treat this as stable, qualifying income.
One special reason folks may change jobs is to take advantage of new training or education. Lenders recognize the positive nature of this reason, but they may require evidence of the training or education (such as an unofficial transcript), especially if the new job is in a different field of work.
While all loan programs follow these standard guidelines, they place different emphasis on the length of current employment and the frequency of job changes.
- Conventional loan guidelines are the most lenient. A recent job change typically will not prevent you from qualifying as long as you don't have a history of repeated job loss. Compensating factors, such as a large down payment, may allow you to overcome a weak job history.
- FHA loan guidelines require lenders to take extra steps to verify your income stability if you've changed employers more than three times in the last 12 months. Expect your lender to ask the reasons for the job changes. The guidelines specifically identify the reasons above as valid.
- VA and USDA loan guidelines suggest that lenders not count income from a job held less than 12 months as qualifying income. However, the guidelines allow some flexibility on a case-by-case basis, such as the reasons cited above.