Employment History

Most lenders will require that all loan applicants have an employment history which is no less than 2 years to show that you have a sustainable source of income.

Time spent receiving an undergraduate or graduate degree as well as time spent obtaining specialized training are frequently credited towards an applicants employment history as long as they immediately preceeded employment in a related line of work.

Don't worry about gaps in employment, just be prepared to explain them, having the names, numbers and addresses of previous employers will help also!

For self employed borrowers, it's best to have a business license that shows you have been in business for at least two years. You can also provide a Tax returns, CPA letters, references etc to document your business.

Lenders like to see at least two years employment in the same line of work. It is not acceptable to change from one profession to another completely unrelated profession because it does not show job stability.

If employed at your current employer for less than 2 years lenders will often want to get a Verification of Employment (VOM) from your current and previous employer.

You will have to provide your most recent paystubs to the loan officer. This not only verifies your income, but lets the lender know you're still working there. Many times, the lender will do a verbal verification of employment just to make sure you're still working there.

If you changed employers within the last 2 years, but stayed in a similar line of work, lenders will want to see an increase in pay. Lenders don't mind borrowers changing employers as long as the borrowers' financial situations are improving.

It happens. People move from state to state and a high percentage of the time this will require a new job. Just like an in state job change, a letter of explanation will most likely be required by the lender, to prove that there will not be a drop or loss of income upon arrival at the new job in the new state.

Sometimes a person is not able to prove employment because they work "Off the Books", and the employer will not verify employment.
There are mortgage programs where no employment history needs to be disclosed to the lender.

A "verification of employment" form (VOE) is many times the simplest way to document a persons income if paystubs and other documents have been misplaced.

Employment history is one factors that lenders consider when providing a loan. A long employment history can indicate stability and reassure the lender that the risk of default on your loan is low. If you have employment history of less than two years, there are alternative loan products available.

FHA mortgage underwriters will look at consistency of income if you have changed jobs frequently, but maintained or improved your income.

With recent issues in the mortgage markets its often necessary to prove 3 years of income. This depends on the lender your mortgage professional chooses.

» DISCLAIMER: The information contained in this article on 'Employment History' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.