What Employment History Do I Need to Purchase a Home?

With the possible exceptions of recent college grads and those who have been out of the workforce for an extended period to raise a family, the expectation is that everyone who applies for home financing will have some type of work history.

The formal guidelines on employment history state that you should have at least two years of work history in order to purchase a home. However, these are just that: guidelines, not hard-and-fast rules.

What lenders are looking for is consistency and a job history that makes sense. What does this mean?

If you have changed jobs in the past few years, but have done so to further your career, as in getting a higher salary or taking on more responsibility, that would make sense to lenders. Also, events such as medical conditions may keep people out of work for an extended but explainable period of time.

What lenders are leery of are gaps in employment without a reasonable explanation. In our current economy, events such as plant closings, layoffs, and other reductions in force are commonplace and can be easily explained.

What you do to put yourself in a buy-ready position after going through any of these situations is what interests lenders.

One employment scenario that might prove challenging for mortgage approval is a recent move from a salaried or hourly position to self-employment, as you may have little or no history of being in business for yourself.

If you have questions about how your employment history may affect your qualifications, please contact our office to discuss your options.