Getting a mortgage can be especially challenging for those who are just starting their career or have been in their current job for less than two years. However, getting a mortgage with a new job is possible if you take the right steps and have a good credit score.
Here, we’ll discuss what lenders are looking for when it comes to these three factors and how they affect your ability to get approved for a mortgage loan.
Things You Should Consider Before Getting A Mortgage
- Stability. When it comes to stability, lenders want to know that your income is reliable and consistent. This means that if you are applying for a mortgage with a new job, lenders will want to see a 24-month employment history. If you have been employed at the same job for many years, this can be a positive factor regarding your mortgage approval.
- DTI. The second thing lenders consider is your debt-to-income ratio (DTI). This is the ratio of your monthly debt payments to your monthly income. Your DTI on a Conventional loan should be within 50%. On an FHA loan it can go to 56.99%. Lenders want to ensure you can handle the additional debt that comes with a mortgage loan. Therefore a 24+ month history of these variable income types is generally required, to show a large enough sample size so they can be averaged out and used to predict the future receipt of these income types.
- Predictability. It’s easy to figure out what to expect with a salaried or full-time hourly job. You know ahead of time what your wages will be, and you can plan your finances around it. Variable incomes – like bonus, commission, and overtime – can fluctuate, so the mortgage rules generally require a 24+ month history of these income types, so they can be averaged out over a sustainable sample size to calculate what future income could be assumed.
Things To Consider
It’s important to remember that lenders want to ensure that you can afford to make the payments. This means you must demonstrate your financial stability and ability to make the payments. You’ll need to provide the lender with the following:
- Credit Score. Your credit score is an important factor in getting approved for a mortgage. A good credit score can help you get a lower interest rate and better loan terms. It’s important to ensure that your credit score is up to date before applying for a loan.
- Employment History. Your employment history is also important. Lenders will want to see that you have been employed in your current job for at least two years. If you have recently switched jobs, you may need to provide a letter from your employer verifying your employment.
- Assets. Finally, you’ll need to provide the lender with asset statements. This includes bank statements, and/or 401k, and other documents demonstrating your financial stability. Once you have gathered all the required documents, you can submit your application to the lender. They will then review your application and make a decision.
Getting a mortgage with a new job can be a challenge, but it is possible. It is important to understand that you will need to meet certain qualifications to be approved. You can increase your chances of getting approved by demonstrating financial stability and having a good credit score. Good luck!
Get In Touch With Your Mortgage Expert in Kansas City Today!
Want to learn more about conventional loans? McGowan Mortgages is a great choice for those that have recently changed jobs as they have the most lenient financing options to make the process simple. We have helped thousands of families in Kansas City and throughout Missouri make their house dreams come true with our top-tier refinancing and home purchase. Apply with us today at (816) 631-9687!