Buying your first house can be exciting, but also a little nerve-wracking. If you’re like most first-time buyers, you’ll probably need to apply for a home loan in order to finance your purchase. You may be wondering what to expect and what kind of requirements your lender will have for your income and employment history. Most lenders prefer two years of consistent employment, but what if you’ve changed jobs or careers? Does that mean you’re automatically disqualified? Here’s what you need to know.
Can You Buy a House without Two Years of Employment?
Two years of consistent employment is considered the golden standard for buying a house. Lenders want to know that you’ll be able to repay your loan. Having consistent employment and a steady paycheck makes you look like less of a risk.
That being said, lenders also know that life happens. Sometimes, people change jobs or start a new career. Fortunately, this does not automatically disqualify someone from being able to get a home loan. If changes are for the better and the circumstances are good, then it’s more likely that your lender will be willing to work with you.
For example, if you recently got a new job and your salary either stayed the same or increased because of the change, then you’ll probably be okay. Or if you’re able to compensate for your circumstances with a large down payment and a good credit score, that might work as well. In these cases, lenders tend to be more forgiving when it comes to the two-year employment rule.
When Is a Change in Employment a Problem?
If you tend to change jobs frequently, you have a major gap in employment, or you move from a higher-paying job to a lower-paying job, then your eligibility could be at risk. Lenders want to see stability, whether you’re buying your first house, second, or subsequent.
However, even in these circumstances, there may still be workarounds. We recommend talking to your lender to find out exactly how your situation fits with their eligibility requirements.
Compensating Factors for a Change in Employment
A lender may be more willing to work with you if you’re able to compensate for your change of employment in other ways. Some examples of compensating factors include:
- A significant downpayment
- An excellent credit score
- Low debt-to-income
- Other forms of income
- Significant cash in savings or assets
Have Questions About Your Home Loan Eligibility?
Buying your first house can feel overwhelming at times. If you have questions about your loan eligibility or employment history, please do not hesitate to reach out. One of our team members will be happy to assist you.
