How will starting a new job affect my chances of getting a mortgage?
From a mortgage lender's perspective, certain types of job changes are easier to deal with than others.
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I'm interested in buying a co-op and I just started a new job. Can I get approved for a mortgage? Will having a new job affect my chances of getting approved by a co-op board?
A career change should not prevent you from getting a mortgage, but you may need to rustle up some additional documentation for the lender and co-op board, our experts say.
"If you are looking to change jobs during a new home purchase, it does not necessarily mean you cannot get a mortgage," says Brittney Baldwin, vice president and loan officer of National Cooperative Bank (FYI, a Brick sponsor). "There may be certain documentation that the lender must obtain on the new job, such as an employment offer or contract."
From the lender's perspective, certain types of job changes are easier to deal with than others. Moving from one full-time, salaried job to another is fairly straightforward, but if you're not a W-2 employee, more information may be needed.
If you are moving to start your own business or become a freelancer or independent contractor, "the bank will need to see a two-year tax history under the new income structure to use that income for qualification," says Matthew Buonadies, a loan officer with Citizens Bank. In that scenario, he says, "it might be worth waiting on doing so until after the home buying process is completed."
Another consideration is whether you earn a stable base salary, or if your compensation is supplemented considerably by commission or bonuses. In the latter case, again, more documentation will be required.
"A bank will only count bonus income from a new employer if you have a guarantee of receiving the bonus for two years," says Melissa Cohn, regional vice president and executive mortgage banker at William Raveis Mortgage. "If you need commission income to qualify, the new employer would have to guarantee a minimum commission income for two years as well. If you have had a history of earning commission or bonus income and only have a one-year guarantee, there are some lenders that may approve the loan as well."
As for co-op board approval, each building sets their own guidelines, but demonstrating a strong employment history and receiving approval from a lender should be sufficient.
"So long as the purchaser has a good employment track record, I do not believe a board would hold the fact that the purchaser was starting a new job against him or her," says Jeffrey Reich, a partner in the law firm of Schwartz Sladkus Reich Greenberg Atlas. "However, if this was a first job, it could potentially be an issue."
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