A statement that is frequently tossed out to me from prospective buyers is, "Well, we really want to buy a house but I haven't been on my job for two years yet." Thinking back to my beginning days in the real estate industry in 1991 that may have been true-demonstrating job stability was and to a certain degree, still is an important factor in the list of items that underwriters look for in order to approve a loan.
But 1991 was a long time ago. And a lot has happened. Immediately prior to the mortgage meltdown a borrower didn't even need to have a job if their credit score was good and they declared a certain amount of assets on their loan application (that weren't subject to documentation) But I think that most of us would agree that may have been taking it too far in the wrong direction.
In any event, the current rules, while not quite so loose as in the wild west-anything goes days of mortgage loans aren't so stringent as the two year rule from my early days in the business. Let's face it-a lot of people lost their jobs in the 2008-2010 recession through no fault of their own. It seems a trifle unfair to make them show two full years of employment once they have once again found a job.
The good news is that government loans aren't quite as fussy as conventional loans on employment. Typically if a borrower has been on a job for 30 days, and has completed all probationary periods satisfactorily they are likely to be eligible for a mortgage loan. There are a couple of caveats with this rule though. There needs to be previous job history with a good explanation for the employment gap. But-if a borrower has moved from one job to another either in the same line of work or has significantly bettered themselves with the new move, there is continuity and the only issue is getting through the probationary period if there is one.
For young adults who have just graduated from college and are working at their first job-with government loans the same rules apply-the course of study in school substitutes for job time. For high school graduates however, most lenders will want a year job time to show consistency due to the fact that there is no specific course study geared to a particular profession.
With conventional lending the rules are different. If a borrower has a history of employment and then has a gap due to job loss or perhaps took time off to stay home with children-the amount of time back in the work force depends on the lender. Our company works with one lender that will allow the borrower to be back at work for one month as long as they are in the same line of work. Yet another lender will only allow a loan if the borrower has been back at work for six months. So the rules vary and if a borrower is turned down it is beneficial to check more than one source for the mortgage loan. For new borrowers that have just graduated from college, once again if they are working in their field, a conventional mortgage should be a possibility and the time spent on the job would vary from lender to lender.
Job hopping is still open to question as underwriting wants to be relatively certain that the borrower will remain employed.
Part time employment income can be taken if the borrower has held the part time job for two years. (Even so there is an exception-we do use a lender that requires one year so if we need the part time income to qualify the borrower for the price range he/she wishes to purchase in we would take that person to that specific lender. But the majority of lenders are going to want 2 years on part time work.)
If a borrower has a part time job that turns into a full time job the years spent working part time do count as consistent job time and once the worker goes full time his job qualifies him for a mortgage loan.
My conclusion would be that a borrower should never assume that because he is turned down for a mortgage loan from his bank that he is not eligible for a loan. It is worth the extra steps to check around to see if he does qualify for a program that is not offered by his bank or original lender.
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