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Getting a Mortgage Without a Perfect 2-Year Work History

You don't have to be in the same job for two years to qualify for a mortgage.

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Updated · 3 min read
Barbara Marquand
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Michelle Blackford
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A dependable income is a must for getting a mortgage. Lenders want evidence that you'll be able to repay a loan, so typically they like to see a steady two-year work history with a stable or rising income.
But that doesn't mean any kind of job change or employment gap will sink an application. Here's what to know about qualifying for a mortgage if your work history is a little outside the box.

Job or career change

You don't have to stay in the same job, or even in the same career, for two years to get a mortgage. What’s important is showing a consistent level of income. As long as your income remains steady or increases, switching jobs before you apply for a mortgage shouldn't hurt your chances.
However, a change in the type of pay, such as a recent move from a salaried position to a commission-only or self-employed role, would make qualifying tougher. To count self-employed, commission or overtime pay, a lender usually wants to see a full two-year history of that type of income to get a reliable average.
Another complication would be a job change during the mortgage application process. If that happens, call your lender right away. With a conventional loan, you can typically produce a pay stub from the new job, a job offer letter and a verification of employment (VOE) letter to move forward. However, with a government-backed loan, you’ll need 30 days of pay stubs before you can close.

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Employment gap

It’s best if your mortgage application reflects no employment gaps in the last two years. But life can be bumpy. Perhaps you were laid off, went back to school, took parental leave or needed to take care of a sick family member.
A lender may ask for an explanation and documentation to back it up, but a gap of up to six months isn't a deal killer. Be upfront and honest with your lender.
🤓 Nerdy Tip
What about a gap longer than six months? Lenders will apply more scrutiny, but you still might qualify. For loans backed by the Federal Housing Administration, U.S. Department of Veterans Affairs or U.S. Department of Agriculture, you'll need to be employed for at least the most recent six months For a conventional loan, requirements vary by lender, so you’ll need to check with your lender about how they treat employment gaps.

New job out of school

It’s possible to qualify for a mortgage if you just started a job after completing your schooling. Education can count as work history, whether it’s a doctoral program or trade school.
Requirements vary by loan program. Your chances of success will be higher if your job is related to your degree.
🤓 Nerdy Tip
Just finished medical school? Some lenders offer medical professional mortgage programs for physicians, medical residents and dentists. The programs have low down payment requirements, don't require private mortgage insurance and allow higher debt-to-income (DTI) ratios than traditional mortgages to accommodate those with medical school debt.

Self-employment

Self-employment isn't a roadblock to a mortgage as long as you can prove a history of steady income from your business. Lenders generally want to see two years of business tax returns, year-to-date profit and loss statements, and sometimes business bank statements.
Like any borrower, you can increase your chances of qualifying for a mortgage by maintaining a good credit score, monitoring your DTI ratio and getting all of your paperwork ready to submit with a lender.

Retirement

For retired applicants, lenders consider income from sources such as Social Security and pensions, rather than employment. Retirees can also qualify using "asset dissipation" — the drawing down of savings and retirement accounts. This may require additional verification and may have tax implications. Be sure to consult with a financial advisor and mortgage professional to understand your situation.

Compare lenders

Regardless of your work history, compare at least a few lenders to find the best combination of rates, fees and customer service. And if you have questions about whether your recent employment meets the mark, reach out to mortgage professionals to discuss your options.
Lenders consider multiple aspects of your financial picture, including credit, down payment, DTI, and income, so understanding where you stand on all fronts will help you find the right loan for your situation.
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