How Your Job Impacts Getting a Home Loan from a Mortgage Company
If you’re in the market looking for your first house, one of the most important factors on your side is steady, dependable income. Having a good-paying job shows the mortgage lender that you are dependable, trustworthy, and able to pay the monthly mortgage. Having a steady income is a great benefit to show to a for first-time homebuyers.
Maybe you’ve been able to save up for a solid down payment (5% or higher), and that’s great. But what’s even more important for a mortgage pre-approval is how lenders look at your regular streams of income. Lenders want to see how much your job income brings in, to better assess how to structure your monthly mortgage payments. For instance, a company salary is viewed as more dependable for a mortgage seeker than a freelance or “gig economy” income.
Let’s look at how important a well-paying job and good credit rating can positively help with you obtaining a mortgage for your first home.
The 2 Yr. Threshold
Mortgage lenders see job stability as an absolute plus on your application. In fact, once you’ve shown that you’ve been steadily employed for two years or longer, your job history becomes less important to a mortgage lender.
First-time home buyers working at a job for longer that two years only need to show the normal types of income and tax information for ready approval. This would include items like current employment verification, current paycheck documents, W2 or 1099 tax forms, and the last two years of federal tax returns. These should be sufficient to obtain mortgage approval without much additional investigation.
For those prospective home buyers with resumes that shows frequent job hopping, mortgage lenders would likely show more scrutiny toward those seeking mortgage pre approval. Lenders would check if you’ve ever been unemployed for a long period of time, or what your work history has been over a period of years. They would also likely seek more detailed information about the industry in which you’ve worked, and numbers of years worked.
Basically, lenders will assess how unsteady job holders can comfortably afford mortgage payments. This is their expertise. They leave no document unexamined – the lender is there to minimize risk for the mortgage company.
When a New Job Plays a Part
With the improved economy in recent years, many first-time home buyers are taking new jobs in other cities while looking for a home at the same time. details different scenarios for those looking for a first home in a new city where the job is located. If you are moving for a new job with a contract of 2,3 or 5 years, that job guarantee is viewed as a big positive for a mortgage company.
Another situation that might be acceptable for a mortgage lender is a first-time home buyer getting a new job in a new city at a higher income. That transition is seen as a positive by general mortgage lenders, and they would look favorably on the applicant.
Depending on your relationship with your mortgage lender, some of these aspects may be less crucial than others in getting a mortgage approval for a first-time home buyer. A good relationship can have some sway on an applicant’s moves between a company salary and freelance income, recent job changes or changes in life and marriage. However, an applicant should expect to provide more documentation and more details on income flows in recent years. Additionally, in these circumstances, lenders may choose to offer a more cautious mortgage to an applicant with variables in income.
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