What documents do you need to submit to the lender when you change a job?

If this happens while the mortgage approval process is underway, you should provide documents that verify your new job title, income, and employment stability. Here belong: Letter of explanation. The lender expects you to give reasons for changes in employment you have undergone. Signed employment contract or offer letter. It should mention your new position, hourly rate/base salary, start date, and indication of the occupation character (full-time, contract, or salaried). Most lenders’ requirement is that the start date should be within a certain period (typically between 30 and 90 days of closing). Verification of employment (VOE). Simply put, these are your employer’s contact details and your written permission for the lender to get in touch with them to verify your employment status. The most recent pay stub. If you transitioned, you may submit your last three pay stubs instead. Tax documents from the previous year. These include tax returns, W-2s, and 1099 forms. They are meant to prove your continuous work history over this period. Bank statements for the last 3-6 months (depending on the lender) showing your assets and income. Relocation agreement/transfer letter. They are needed only if your job shift was accompanied by moving to another state or city.

What job changes are frowned upon by the lender?

Anything that interrupts income stability threatens your long-term solvency. From that standpoint, the lender views any mid-application job change as a risk. But some changes look especially unwelcome, so the lender will think twice before agreeing to a mortgage if you: Switch from a steady salary to a variable income (commissions, freelancing, hourly work, bonuses). Even if your earnings increase, they are rather precarious. Become self-employd. See details in the next FAQ. Transition to an unrelated vertical. Such a change sets your previous work experience at naught and harms skill continuity, increasing the risk to your long-term stability. Lenders will require a letter of explanation or even proof of tenure. Move down the career ladder. A lower-paid position worsens the basic KPIs (credit score, debt-to-income ratio (DTI), salary size, etc.) lenders use to assess the likelihood of getting their money back. Enter a probation period. After three or six months, the employer may decide that you aren’t the best fit and terminate the contract. Job-hop. To lenders, a person who frequently changes jobs (even if it’s lateral shifts to positions with the same salary) is a high-risk investment, and their financial and career stability is questionable.

Can you get a mortgage if you switch from a salaried job to self-employment during the approval process?

Generally, it is a very bad call. You should avoid it at all costs, as most lenders will deny your loan, put it on hold, or (in the best-case scenario) require you to go through underwriting again. While lenders dislike any kind of job change mid-application, becoming self-employed is a red flag for most of them because: The borrower loses guaranteed income. W-2 jobs provide predictable salaries that lenders can verify with pay stubs and employer letters. A self-employed individual can’t provide those. The two-year condition isn’t met. Most lenders require at least 24 months of self-employment to understand the borrower’s income is stable in this role. In rare cases, one year of self-employment will suffice. If you have just started your entrepreneurial or freelance career, the lender has every reason to doubt your success. Underwriting results are canceled at the last minute. Typically, the lender holds the final employment check days or even hours before closing. If you inform the lender about the U-turn in your career that late, it raises suspicions about your reliability as a customer. You can get away with a transfer to self-employment and still get a mortgage if you become a consultant or a 1099 contractor with the same employer, do the same work, and have a comparable or – better – higher income. Anyway, each lender treats self-employment transfers differently, so consult them for your specific use case. A viable alternative for newly self-employed individuals is a non-QM loan.

Getting a Mortgage After Changing Jobs: All You Need to Know

How Changes Shape Our Life

Human life is nothing but a sequence of changes. These aren't only transformations in our organism and physical appearance. We finish high school and enter college in another city or even state, move with our partner into a new dwelling, switch neighborhoods, and find hobbies that take us to various corners of the world. Changing jobs is one of those major shifts with far-reaching implications for your salary, career prospects, work-life balance, family life, social interactions — you name it. Among other things, changing jobs affects the mortgage you need to buy a home. How serious is the impact? Let's find out together.

The Borrower Changing Jobs: A Lender's Perspective

What do lenders look for when they provide a loan that lets a mortgagor buy a house? Naturally, they expect to get back the money they lend, plus interest. That is why the borrower's solvency is mission-critical for them. How do they assess it? Lenders resort to an out-and-out underwriting routine, checking the potential borrower’s employment, income, credit history and score, cash reserves, and other parameters. They approve a loan only if they see satisfactory values of these indices as well as their stability. Changing jobs is not a sign of stability; lenders like stability in borrowers so much.

However, there is a whole world of difference between changing jobs during the mortgage approval process and after the loan is given.

Changing Jobs during and after Mortgage Approval

If you have closed the loan and celebrated the housewarming party, the lender isn't interested in your career. The only thing it cares about is your regular monthly payments. You may switch companies, enter new industries, move up to a new salary – the lender doesn't care. So you don't need to inform the mortgagee about your employment changes in this case. (On a side note, you should realize that if you consider refinancing the mortgage in the foreseeable future, job changing may become a factor worth considering.)

However, once you happen to change jobs while mortgage approval is still underway, you are in for all kinds of headaches. The best way to avoid them is to put off job switching, if possible, until you hold the keys to your home in hand. In case waiting is not an option, there are a few things to remember.

First of all, it's no good trying to conceal it. The lender will find out anyway, and when it learns about the change through its own channels, its trust will plummet instantly, and you may get a point-blank refusal. That is why you should inform the lender about the change as soon as it occurs.

Secondly, you should provide exhaustive information about your new job, including the title, employment type (full-time, contract, salaried, self-employed, etc.), the amount of your new salary, and the start date. Specifically mention if you are on a probation period. Some lenders also require an official letter from your new employer.

Finally, be ready for a re-verification. Lenders want to avoid any unpleasant surprises that may result from their borrower finding another job. Since it may take some time, stay responsive and provide all necessary papers (such as verification of employment, pay stubs from the new job, etc.) on short notice; otherwise, delays are imminent.

Usually, if you move to another role within the same industry with a similar or higher pay or transition from one salaried job to another, you can still get a mortgage. The lender will just need time to check your new income level. However, some job changes can make the loan difficult or disqualify you from getting a mortgage (see the FAQ section).

These are the most general considerations to keep in mind when switching jobs during mortgage approval. Still, each scenario is unique, so it is wise to consult seasoned mortgage industry experts for competent advice.

How LBC Mortgage Can Help You

During our 18+ years of presence in the American mortgage market, we have provided hundreds, if not thousands, of mortgages to people in 11 states and nationwide. Our specialists have faced numerous instances of our customers changing jobs shortly before or during the approval process, so they can provide professional assistance and guide borrowers through the entire process of underwriting, documentation preparation, and loan finalization.

Contact LBC Mortgage for a qualified consultation regarding any mortgage-related issue, and use our loans to pave the way to owning a home.

Does Changing a Job Prevent You from Getting a Mortgage?

The short answer is no. It is best to postpone any major changes to your employment status and income until after you have completed all the red tape and signed the mortgage contract. If job switching can't be put on hold, you should inform the lender about it, submit all relevant details about your new position, and expect a re-verification that will somewhat slow down loan approval. As a rule, a lateral move within the same company or industry, where your salary level remains equivalent, presents no problem for getting a mortgage.

To avoid mortgage disqualification and ensure smooth re-underwriting after a job change, enlist the professional assistance of a vetted lending agency.

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Author:

Alex Shekhtman CEO & Founder, LBC Mortgage

If this happens while the mortgage approval process is underway, you should provide documents that verify your new job title, income, and employment stability.

Here belong:

Letter of explanation. The lender expects you to give reasons for changes in employment you have undergone.
Signed employment contract or offer letter. It should mention your new position, hourly rate/base salary, start date, and indication of the occupation character (full-time, contract, or salaried). Most lenders’ requirement is that the start date should be within a certain period (typically between 30 and 90 days of closing).
Verification of employment (VOE). Simply put, these are your employer’s contact details and your written permission for the lender to get in touch with them to verify your employment status.
The most recent pay stub. If you transitioned, you may submit your last three pay stubs instead.
Tax documents from the previous year. These include tax returns, W-2s, and 1099 forms. They are meant to prove your continuous work history over this period.
Bank statements for the last 3-6 months (depending on the lender) showing your assets and income.
Relocation agreement/transfer letter. They are needed only if your job shift was accompanied by moving to another state or city.

Anything that interrupts income stability threatens your long-term solvency. From that standpoint, the lender views any mid-application job change as a risk. But some changes look especially unwelcome, so the lender will think twice before agreeing to a mortgage if you:

Switch from a steady salary to a variable income (commissions, freelancing, hourly work, bonuses). Even if your earnings increase, they are rather precarious.
Become self-employd. See details in the next FAQ.
Transition to an unrelated vertical. Such a change sets your previous work experience at naught and harms skill continuity, increasing the risk to your long-term stability. Lenders will require a letter of explanation or even proof of tenure.
Move down the career ladder. A lower-paid position worsens the basic KPIs (credit score, debt-to-income ratio (DTI), salary size, etc.) lenders use to assess the likelihood of getting their money back.
Enter a probation period. After three or six months, the employer may decide that you aren’t the best fit and terminate the contract.
Job-hop. To lenders, a person who frequently changes jobs (even if it’s lateral shifts to positions with the same salary) is a high-risk investment, and their financial and career stability is questionable.

Generally, it is a very bad call. You should avoid it at all costs, as most lenders will deny your loan, put it on hold, or (in the best-case scenario) require you to go through underwriting again. While lenders dislike any kind of job change mid-application, becoming self-employed is a red flag for most of them because:

The borrower loses guaranteed income. W-2 jobs provide predictable salaries that lenders can verify with pay stubs and employer letters. A self-employed individual can’t provide those.
The two-year condition isn’t met. Most lenders require at least 24 months of self-employment to understand the borrower’s income is stable in this role. In rare cases, one year of self-employment will suffice. If you have just started your entrepreneurial or freelance career, the lender has every reason to doubt your success.
Underwriting results are canceled at the last minute. Typically, the lender holds the final employment check days or even hours before closing. If you inform the lender about the U-turn in your career that late, it raises suspicions about your reliability as a customer.

You can get away with a transfer to self-employment and still get a mortgage if you become a consultant or a 1099 contractor with the same employer, do the same work, and have a comparable or – better – higher income.

Anyway, each lender treats self-employment transfers differently, so consult them for your specific use case.

A viable alternative for newly self-employed individuals is a non-QM loan.

Can You Get a Mortgage after Changing Jobs?

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How Changes Shape Our Life

The Borrower Changing Jobs: A Lender's Perspective

Changing Jobs during and after Mortgage Approval

How LBC Mortgage Can Help You

Does Changing a Job Prevent You from Getting a Mortgage?

What could your mortgage look like?

1. What documents do you need to submit to the lender when you change a job?

2. What job changes are frowned upon by the lender?

3. Can you get a mortgage if you switch from a salaried job to self-employment during the approval process?

Let's find a loan
that fits your life.

Result:

Can You Get a Mortgage after Changing Jobs?

Select a loan type

Great! What type of property are you purchasing?

How is this property being used?

Have you already found your new home?

Select your state

What is the estimated purchase price?

Estimate your credit score

Have you or your spouse served in the military?

Have you had a bankruptcy or foreclosure in last 7 years?

The final touch

Great! What type of property are you financing?

How is this property being used?

Are you looking to cash out?

Estimate your credit score

Have you had a bankruptcy or foreclosure in last 7 years?

The final touch

How Changes Shape Our Life

The Borrower Changing Jobs: A Lender's Perspective

Changing Jobs during and after Mortgage Approval

How LBC Mortgage Can Help You

Does Changing a Job Prevent You from Getting a Mortgage?

What could your mortgage look like?

Frequently Asked Questions

1. What documents do you need to submit to the lender when you change a job?

2. What job changes are frowned upon by the lender?

3. Can you get a mortgage if you switch from a salaried job to self-employment during the approval process?

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