Getting a Mortgage With a New Job: How It Works

The process for getting a mortgage with a new job may look a bit different from buying a house after working for your employer for a few years, but it can be done. You’ll typically just need to share supporting documents that outline the terms of your new gig with your lender, and have a start date that aligns with your closing date. Here’s a closer look at exactly what mortgage lenders require when you want to buy a house while switching jobs.

Can you get a mortgage with a new job?

In a perfect world, mortgage lenders like to see a two-year employment history in your current position before they approve you for a home loan. After all, it’s their responsibility to verify that you can comfortably make your mortgage payments each month. If your employment and income have been stable for a while, they’ll likely feel more secure in assuming that it will continue.

However, nothing is perfect, so there are ways to qualify for a mortgage if you haven’t been at your job for that long or you’re in the process of switching positions. You may just have to navigate a little extra red tape during the underwriting process.

The best way to figure out what needs to be done is to talk openly with your lender about your circumstances. They’ll be able to look at the specifics of your employment situation, as well as any requirements from your mortgage loan program, and help you put a plan together for moving forward.

  Not sure who can help? Check out our guide on how to choose a mortgage lender.

How to handle switching jobs while buying a house

While the exact requirements can vary, here’s an overview of what you can do to increase your chances of getting approved for a home loan while navigating a job switch.

Have the necessary documentation ready

Traditionally, lenders look at W-2s or tax returns to verify employment during the mortgage process — but if you’re just getting started in a new position, you may not have those on hand. In that case, your lender will likely ask to see the following documents instead:

• Offer letter: The offer letter must be signed by both you and your future employer and include the specifics of your employment, such as your position, salary and start date, which must occur within 90 days of your mortgage closing date. Plus, if your job offer is contingent on anything, you must be able to show that you’ve satisfied those conditions prior to closing.
• Pay stubs: If available, pay stubs supporting the level of income outlined in the offer letter should be provided.

Prepare for a little extra scrutiny

In addition to reviewing the above documentation when you apply for a home loan, many lenders will go a step further and conduct a verification of employment (VOE). During the VOE, the lender will reach out to your employer directly to request verbal or written confirmation of your employment and intent for it to continue.

How mortgage lenders look at different types of income

Beyond the length of employment, lenders will also verify the amount of income you receive when approving you for a no job mortgage loan. Depending on how your income is structured, the expectations can look a little different.

Annual salary

Annual salaries are the easiest type of income to verify. In an ideal scenario, the lender will do their due diligence by asking for a VOE, a recent pay stub and at least one year of W-2s. However, if those aren’t available, they will likely depend on an offer letter as described above.

The lender will also consider how much you make on a monthly basis to determine how much you can afford to borrow. In this case, their income calculation simply involves dividing your annual gross income — your income before taxes and any applicable tax deductions — by 12 to determine your monthly gross pay amount.

Hourly income

The documentation requirements for hourly wages are the same as for annual salaries. However, the income calculation works a bit differently:

(Hourly gross pay x Average # of hours worked per week x 52 weeks) / 12 months

Variable income (bonuses, overtime, commissions, etc.)

Lenders look for consistency in the loan approval process, which is why getting approved for a mortgage with a variable income structure is a bit trickier.

That said, it can be done — you may just need to provide a bit more documentation explaining how your income is structured. As a rule of thumb, you’ll, ideally, need a completed verification of employment form, recent pay stub and two years of W-2s.

To calculate variable income, the lender will take an average. They’ll also consider the trending amount of the received income, payment frequency and the history of receipt.

Note: The process for getting a mortgage while you’re self-employed is a bit different. In that case, income verification will rely heavily on your personal and business tax returns.