Are you considering a new job but worried about its impact on your mortgage application? Or, you're already in the process of applying and wondering how to make the most positive impression possible.

Moving into a new role is exciting, but understanding what's involved when securing a mortgage can be challenging. Luckily for you - this comprehensive guide will walk through everything needed, from preparing paperwork to navigating regulations.

So read on as we provide guidance and advice to getting approved for a mortgage – even with a new job!

5 Steps to Getting a Mortgage with a New Job

Step 1:Learn the rules for getting a mortgage with a new job

The first step in getting a mortgage when you have a new job is to ensure that you meet all the requirements set by lenders. Here are some of the rules for getting a mortgage with a new job:

• Lenders prefer two years of work history in the same employer, as this shows your income is stable and predictable.

• Your offer letter or contract must be signed and dated, and your position should not depend on additional training or certification.

• If you are recently out of college, transcripts, and degrees can replace traditional work experience.

• If you completed trade school certification or training, this will help demonstrate competency and earning potential to lenders.

• Military veterans may be eligible for loans guaranteed by the U.S. Department of Veterans Affairs.

• You must have enough savings to cover your mortgage payment and other monthly expenses until your first paycheck.

• The loan must be for a single-family primary residence, not a second home or investment property.

• Your employer cannot be a party to the purchase contract, including real estate and mortgage companies involved in the purchase.

• Bonuses, stock options, and potential raises should not be added until you have one to two years of receiving them.

By following these rules, you can increase your chances of getting approved for a mortgage with a new job!

Step 2:Gather documents to verify your new job and income

Securing a mortgage while transitioning to a new job can be daunting, but ensuring you have all the necessary documents before applying is important.

To verify your new job and income, gather items such as a contract of employment with details on your start date and salary, proof of any bonuses or benefits, recent payslips, or bank statements showing regular deposits consistent with your stated salary.

You will also need proof of employment history over the last three years, so having details from previous employers can help your application. You should contact former employers in advance for written references.

While these requirements may seem overwhelming at first glance, taking the time to get organized ahead of time will go a long way in helping secure approval for your mortgage.

All the documents you provide should be authentic and up-to-date, so it's important to stay organized throughout the application process and ensure all relevant documents are readily available.

Step 3:Find out if your new job makes you "self-employed"

If you're taking up a new job, it's important to determine if you will be classified as self-employed for mortgage purposes. Self-employed applicants must have two years of tax returns demonstrating their ability to generate consistent and sustained income.

If your new job does not meet the criteria of being 'self employed', lenders can use your employment contract or offer letter when assessing your application – however, this doesn't guarantee approval.

Speaking with a lender about all the required paperwork before applying. You should also discuss any questions or concerns about your new role, advise on eligibility and work out a timeline for getting everything ready to ensure you get the best possible outcome.

Step 4: Avoid converting to commission-based employment.

When applying for a mortgage, it's important to consider any changes in employment that might occur before the loan is approved. Although switching from salaried to commission-based work may seem attractive, doing so can have unexpected consequences.

When transitioning to commission jobs, lenders will look at your past two years' income instead of just the prior year's tax returns. This may cause your monthly payments to increase and could result in the denial of a mortgage application.

Additionally, sudden career changes can be seen as risky by lenders and could lead them to reject your application altogether. Therefore, when considering changing your employment status while you're in the middle of a mortgage process - proceed with caution!

Step 5:Set aside extra savings for mortgage reserves

When applying for a mortgage, it's important to set aside extra savings in case of unforeseen circumstances - this is known as a 'mortgage reserve.'

Having a reserve helps demonstrate to lenders that you can manage your finances and provides them with additional security. It also acts as a buffer should an unexpected event occur, which could affect your ability to repay the mortgage, such as an employment change or decrease in income.

Aim for enough money to cover at least three months' payments when building up your financial reserves. This will help increase your chances of being approved for a loan. By preparing early and setting aside the right amount of money, you can feel confident when approaching potential lenders with your application.

Tips for Getting a Mortgage With a New Job

• Show a History of Satisfactory Income: Before you make a mortgage application, it's important to demonstrate that you can pay the monthly payments. This usually means showing proof of income in the form of payslips or tax returns from your previous job. Make sure to bring these documents with you when applying for a loan.
• Be Ready to Explain Your Career Change: When assessing your ability to repay a mortgage loan, lenders may want to know why you left your old job and chose this new one. You must have an answer ready and be prepared to explain how the new role benefits your long-term financial prospects.
• Respect Your Lender: A lender wants to be sure that you are creditworthy and that they are getting their money back. So always show respect and professionalism when communicating with them. You should also answer all questions thoroughly and honestly, as any discrepancies or omissions could affect the loan approval process.
• Don't Go It Alone: Ask Your New Employer for Help: Employers can provide employment reference letters highlighting your job stability, proving your ability to manage a mortgage payment in the future. You may also ask for help from your new employer when providing documents such as bank statements and payslips.
• Money Talks: Make a Larger Down Payment: The down payment size is important when applying for a mortgage. Making a larger down payment can help ensure you get approved and show the lender you're serious about the loan.
• Keep Your Credit Consistent: Maintaining consistent credit ratings during the loan application is important. This means avoiding major purchases or running up debt on your credit cards, which could hurt your loan approval chances. Additionally, pay all bills on time to keep your credit rating in good shape.

FAQs

How long do I have to stay at a job for a mortgage?

Most lenders require borrowers to be employed at their current job for two years or more to qualify for a mortgage.

What documents do I need when applying for a mortgage with a new job?

When getting a mortgage with a new job, you must provide copies of payslips from your previous job, bank statements, and tax returns. You may also need references from former employers or an employment contract detailing your role and salary.

Do lenders look at my credit score when assessing my application?

Yes – most lenders will look at your credit score when assessing your mortgage application. A good credit score is important as it will show lenders that you're a reliable borrower and have a history of paying back loans on time.

Conclusion

Getting a mortgage with a new job may first seem daunting, but following the five steps outlined in this blog post makes it possible to obtain financing. Be sure to learn all the rules beforehand, gather necessary documents, determine if you meet self-employment criteria, remain consistent in employment type, and set aside extra savings for reserves. Having all these pieces in place makes securing a mortgage loan with a new job much easier.