How A Career Change Affects Your LoanDuring the mortgage application process, underwriters not only assess the amount of your income, but also its future stability. Income stability refers to the likelihood that your income will continue based on your history. Lenders generally require a minimum of two years of steady employment with the same employer; however, they will make concessions, as long as your employment profile shows positive factors that outweigh the shorter income history.
New Job, Same IndustryIf you change jobs, underwriters will consider your income stable as long as you remain within your industry and improve your income. Your lender may request documentation that corroborates the new position and salary.
Time GapsIf you want to change jobs but dont have one in sight, consider postponing the job change until after you acquire a mortgage. A time lapse between jobs may affect your chances of acceptance. Underwriters will examine your history for gaps, and lengthy ones will raise red flags.
Changing From Salary To Hourly Or BonusIncome sources such as commissions, bonuses, overtime pay or contract or trade work are less predictable. Even if you remain with your current employer, changing from a salaried position to a different rate structure could land you in the unstable income category. The rules about employment are frequently changing, and if you change your rate structure, you wont have a history with that kind of payment system. The bank may not be pleased with your new arrangement, and be reluctant to lend to you. Any income source that has a defined expiration date will garner further investigation, and may be deemed unstable. Your underwriter may request documentation proving that your income source will continue to provide you funds for at least the next three years. If you list overtime pay or bonuses to qualify, lenders will require a history of no less than 12 months. If you list bonus income, but you change jobs, they may request documentation proving that your bonus income will remain under the new position.
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