Sometimes a buyer decides to change jobs while they are applying for a home loan. Does this affect their chances of being approved for a home loan? The answer is….
It depends.
Lenders don’t like dramatic employment changes during the application process. Changing jobs during the application process will not automatically result in a denial of your home loan but it does complicate matters greatly. The lender is clearly going to have to evaluate the impact of your job change on your credit worthiness.
If there’s one thing that lenders want to see it is consistency. A person who earns an average wage and has worked at the same place for a number of years is considered much less of a risk than a person that has been making “big bucks” at a new occupation for the last 6 months. On the other hand, lenders are okay with you changing jobs within the same industry to take a promotion with increased pay and responsibilities.
Most home lenders require a minimum of 2 years of work history and also need to account for any times of unemployment as well as changes in income whether it be less money or more. It’s all about verification and proof and being able to demonstrate that you will be able to make your mortgage payment in the future, not just for the next 6 months or year. In short, changing jobs can make your lender nervous.
Staying with the same long time employer while changing positions can be a problem if the method of payment changes – for instance from a salaried position to a commission based position, even if the possible earnings are much higher. Commission based earnings generally require more documentation and work history as a commission based employee.
In the end, if you are staying within the same field of work then switching jobs may not be a problem but changing careers or accepting a lower salary could easily cost you your dream home. You definitely need to talk to your lender and you might want to wait until you close on your new home to make the career or employment change!