How much job history for a mortgage

Again though, this is not the case with all mortgage providers so make sure you scan the market to see what you can get. One of the best ways you can do this is to compare mortgages with Money Expert using our free and impartial online mortgage comparison service. Changing contracts with the same employer can present problems when you are asked to provide the mortgage provider with multiple payslips to prove your income.

Borrowers who have gone from a salaried job to self-employment will need to show at least two years' worth of tax returns to prove that their new income is stable and not likely to disappear any time soon. If they can't provide these returns, lenders won't consider these self-employment dollars as part of their qualifying income.

Borrowers who switch to a new job in a different field, might give lenders some pause. But most lenders are willing to overlook the job change as long, again, as the new job pays on a salary basis, Shenton said. Kyle Dickmann, president of Denver's Dickmann Taxx Group, says that borrowers need to be cautious about taking on new jobs in which a large portion of their yearly salary will be made up of bonuses or commissions that can rise or fall.

Lenders are more nervous about income that isn't as steady as a traditional salary. Dickmann knows this. When he was a young attorney, he applied for both a mortgage and car loan without realizing that a large portion of his earnings included bonuses. His lender turned down his application for a mortgage, while his auto lender stuck him with a high interest rate.

The good news? If you can prove that your bonus or commission income is stable, lenders will accept it. This, though, requires time, and time isn't something applicants have when they take on a new commission-heavy job just weeks or months before applying for a mortgage.

Dickmann, for instance, had to wait six months to show the bank that his bonus income was stable, and he had to prove this by showing his lender those six months' worth of paycheck stubs.

Lenders are more interested in your three-digit credit score, which shows how well you've paid your bills and handled credit in the past, and your debt-to-income ratio.

This ratio measures how much of your gross monthly income is gobbled up by your monthly debt obligations. Lenders want your total monthly debts, including your estimated new mortgage payment, to equal no more than 43 percent of your gross monthly income. If your ratio is higher than that, you'll struggle to qualify for a loan. Lenders also view three-digit FICO credit scores of or higher to be excellent scores.

Scores in the range will generally net lower mortgage rates and easier approvals. If these two numbers are strong, that two-year job history isn't as important. As long as you have enough income to support your monthly payments, most lenders will overlook the fact that you took a new job three weeks ago. Gordon pointed to the two recent college graduates, both with no work history, whom he helped buy homes in the Boulder area.

The two buyers hadn't even started the new jobs they accepted, presenting lenders only with a letter of intent from their new employers. The two also had short credit histories, but they were good histories, with no missed or late payments on their records. The key to persuading lenders to overlook that job switch? You'll need those strong credit scores and debt-to-income ratios. In reality, all that lenders are concerned about it the ability for the borrowers to make their repayments.

Caution is taken with commission or bonus income, but at the end of the day, it's the numbers that count. It is possible to get a mortgage while you are unemployed.

It is possible if you have a strong credit history, a good credit score and you get some sort of income regularly. Companies alter employee pay structures on occasion. They move a bigger portion of pay — or all of it — to bonus or commission. While this gives the employee the potential to make more, future variable income cannot be counted without history. The incentive-based portion of your income must have been received for 12 to 24 months, depending on the overall strength of your mortgage application and loan program.

FHA loans, though, allow commission-based income to be counted with less than a month history. You might sit at the same desk. You might do the same job for the same people. You might make more money. But once you become a contractor, you become self-employed.

Delay the radical career change until you close on your mortgage. Going from college intern to full-timer at the same company to manager at a new firm makes sense. Lenders want long-term, steady employment. They are, after all, issuing a loan at a low fixed rate for up to 30 years. Mortgage applicants are getting approved at the highest levels this decade.

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