Wednesday, March 7, 2018

Can You Still Get a Loan With Gaps in Your Employment History?

Having gaps in your employment history won’t prevent you from getting a loan as long as you’re open and honest about them.

When you apply for a mortgage, you have to provide employment history. Within the three qualifiers of getting a loan, credit, income, and assets, employment history falls under the income category. 

Most people don’t realize that you have to have a minimum employment history of 24 months to qualify for a loan, and one of the common things we see with people qualifying for a loan is gaps in their employment history. Gaps in your employment history won’t automatically disqualify you from getting a loan, though, and there are ways you can address this problem. 

First, there are legitimate reasons why someone would have gaps in their employment history (maternity leave, school, a medical issue, etc.), and that’s OK as long as you explain what your reason may be to your lender in advance and document it on your loan application. This kind of thing will usually pass through underwriting without issue. I once had a client who had a 10-year employment gap because he’d been incarcerated during that time, and we still managed to secure him a mortgage loan. 

Without the proper information, we can’t help you buy the home you want.

Having frequent employment gaps or job changes is another issue that doesn’t necessarily have to stop you from getting a loan as long as it’s documented properly. You should try to limit any job changes when you’re in the middle of a transaction, though. A lender will look at a borrower with frequent job changes and question things like whether they’re working in the same field and if their income is consistent, so if you can prove those things and verify your correct places of employment, they can order the proper documentation you need to qualify. 

When you do change jobs, most lenders require that you’re at your current job at least 30 days, so that’s important too. They sometimes make exceptions, but if you’re in the middle of signing a contract for your new job, that could delay your loan closing. 

Keep in mind, the reasons we have to address any employment gaps to verify your income are is because of the laws and rules already in place; we have to prove that you can make a mortgage payment. It’s our job to help you get qualified as long as it’s within the rules, so be honest and open with your lender about every job you’ve ever had. Without the proper information, we can’t help you buy the home you want. 

If you have more questions about this topic or there’s anything else I can help you with, don’t hesitate to reach out to me. I’d love to help you.