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Home » Knowledge Base » Can I Change Jobs When Buying a House?
Yes, you can switch jobs when purchasing a home. However, there are 5 questions that need answers before you put in your two weeks notice:
1. Are you staying in the same line of work?
2. Will you earn more or less at the new job?
3. Is the new position full or part time?
4. How will the income be reported (e.g. 1099 or W2)?
5. Does your mortgage lender know about your transition?
The answer to this question can have a major effect on your mortgage loan qualification. If you remain in the same line of work, your mortgage lender may require two weeks of pay stubs from the new employer. If you will not remain in the same line of work, the mortgage lender may require 30 days of pay stubs. So, if you’re closing in two weeks and you switch jobs with a new line of work, you could jeopardize the transaction. Ask a Realtor for advice on buying a home.
Your pre-approval may be based on your initial stated or verified income. If you will make more or less than your previous job, it could disqualify you. Earning less could reduce how much you qualify for.
For example, if you’re under contract on a home with a purchase price of $300,000, but the lower pay at a new job reduces your purchase power to $290,000, you would most likely lose the deal.
Now, you’re probably wondering, why would it matter if I make more money? Well, if you’re relying on the Down Payment Program, earning more could push you above the income limitations and therefore, disqualify you for the financing inventive.
The status of the new job can determine whether or not the income can be used. If you’re going from a full-time job to another full-time job, you should be fine. However, to count part-time income, you would need to be at the job with this status for at least two years. Otherwise, the lender cannot use the income.
The classification of the job can determine if the income from the new job can be applied towards your home loan.
If you switch from a W2 type job to a 1099 type job (e.g. independent contractor, self-employment, etc.), you could be disqualified for the loan because you need up to three years of tax returns as a 1099 earner.
If you want to give your mortgage lender a heart attack, switch jobs and tell your lender the day before you close on your home. You won’t just kill the deal, you’ll kill your mortgage broker. Psst… your Realtor too.
When it comes to changes with your employment, consult with your lender. They can advise you of what to do, what not to do, how to do it and how not to do it.
Your mortgage lender will verify your employment status right up to the day of closing.
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