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First-Time Buyers Guide: Buying a Home With A New Job
Even if you're new to a job, you can still fulfill your dream of owning a home. When you search for Mansfield homes for sale, you're destined to find the perfect residence in a neighborhood that fits your lifestyle. While your new job may present financing challenges, some mortgage companies will find ways to work around the obstacles.
Our REALTORS® believe that the path to homeownership is easier when you know what to expect. That's why we created a "First-Time Buyers Guide: Buying a Home With a New Job" with information to help you through your home-buying process.
Employment history is a big factor
Mortgage companies want the answer to one important question: "Can you make your mortgage payments?" The answer boils down to these factors.
- Employment consistency: proof of 24 months continuous employment, preferably at the same job.
- Employee earnings: details of your pay method (salaried, hourly, commission) and hours worked
- Stability: past, current, and anticipated future income documented by W-2s, recent pay stubs, tax records, etc.
A sudden employment transition can diminish your chances of getting a mortgage.
How do you get paid?
Mortgage companies also look for a pattern of income consistency and stability. If your job change was necessary, optimally the mortgage company would want to see you with the identical position and payment method you had at your previous job.
- Salaried: the same weekly income no matter how many hours you work
- Hourly wages: the same number of hours with the same hourly rate, with overtime pay potential
- Commissioned: earnings track record based on sales success
A change in the way you're paid can be an even greater cause for concern. For example, if your new job changes you from salaried to commissioned, the mortgage company may see your income as unpredictable. You may overcome these concerns if your employer can document your earnings consistency and stability.
Self-employed/business earnings
If you're self-employed or a business owner, mortgage companies realize your income will vary depending on a number of factors. You may still get approved if your profit and loss statements, bank records, contracts, two years of tax records, and proof of future income potential show consistency and stability.
There are exceptions, of course. If you recently transitioned from full-time employee to full time self-employed/business owner, your limited track record may bar you from mortgage approval. In that case, it might be prudent to hold off on buying a home until you can show a stronger recent income history
Gaps in your employment history
Proof of income stability and consistency might not be enough to overcome obvious employment gaps. A valid explanation could help you get around this obstacle.
- Military deployment
- A layoff with a return to the same job and income
- A job with the same company: same salary and duties
- Employment with another company: same job and income
Don't give up
If you've tried to get a conventional mortgage with no success, alternative government programs may still approve you.
Each of these programs has different requirements and features such as low down payments, less stringent credit requirements, or alternative employment guidelines.
Don't let employment issues prevent you from becoming a homeowner. Contact Haring Realty for more advice on buying or selling a home or for more information on getting mortgage approval when you're new to the job.
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