advantage of buying a home

Lenders generally require two years of employment to qualify for a home loan, but exceptions exist.

How long do you need to be employed?

You don’t need to be in the same job for two years, and you don’t even need to be in the same career for two years. 

The question underwriters wish to answer is; are you stable?

So, what mortgage underwriters want to see is your job history for the past two years. 

Job hopping, as in going from one job to another in a short period, can be a problem, but it depends on why you are going from one position to another. 

For example, are you getting job offers that improve your financial situation, or is the job hopping because of conflicts at work? 

Improving your financial situation is considered financially responsible, while work conflicts could be risky.

Your work history is only part of the puzzle; mortgage underwriters will also dive into the following when you are looking to buy a home or refinance.

Your credit score and credit history

Debt-to-income ratio

Down payment

Read: Can You Change Jobs While Buying a Home?

You don’t always need years of work experience to get approved for a home loan.

Sometimes, a lender will approve you on the strength of a job offer, especially for positions like lawyers and doctors.

Self employment

Some mortgage programs, like VA loans, conventional, and FHA loans, require self-employed individuals to be self-employed for two years before they can qualify.

We recommend looking into a self-employed home loan for buyers in this situation.

It’s best to talk to a mortgage loan officer or go through the pre-qualification process to determine if your employment is acceptable.

Read: How a Mortgage Loan Officer can Help you from Start to Finish

The first-time home buyer programs with 0-5% down payment options typically do.

Some non-QM options look at your deposits rather than employment history.

Read: Non-QM Loans

Credit score and credit history

The minimum credit score needed for a mortgage approval varies depending on the lender you choose and the type of mortgage you seek. 

The minimum credit score for a conventional mortgage or VA loan is typically about 620; for a jumbo loan, it’s usually 640.

You can get an FHA loan with a credit score as low as 580, sometimes even as low as 570, but you will have to make a more significant down payment than if your credit score were higher. 

Credit history

Do you pay your bills on time, or do you constantly have lates or collections? 

Your credit history and credit score assess your creditworthiness and financial responsibility. 

For example: If you have a habit of not making your rent payment, that is a sign that you’ll do the same with a mortgage. This would be problematic and most likely would result in a mortgage denial.

Bankruptcies, delinquent accounts, accounts in collections, charge-offs, and accounts settled for less than the amount owed are all warning signs you may be a risk.

Read: How to Qualify for a Conventional Loan After Bankruptcy

Debt-to-income (DTI) ratio

Lenders will review the percentage of your monthly income that goes to monthly debts to assess your ability to repay the loan.

For example, it may be challenging to secure a loan if your housing payment is 40% or more of your gross monthly income (28% or more if you’re applying for a USDA loan).

Read: Debt-to-Income Ratio – How it’s calculated

More to learn about buying a home:

Are you ready to apply? Start the process by completing the form below.

  • Are you looking to buy or refinance a home?
  • What is your price range?
  • Do you currently own a home?
  • What type of property are you buying?
  • When are you planning to make your home purchase?
  • Have you (or your spouse) ever served in the US military?
  • Have you declared bankruptcy in the past 7 years?
  • Is this your first time purchasing a home?
  • What is your current credit score?
  • What is your email address?
  • What is your name?
  • What is your phone number?

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