Banks that issue mortgage loans to the population, to minimize potential risks, impose rather serious requirements on the length of service of the borrower. Let us take a closer look at how much you need to work out to get a mortgage.
Why job experience is so important in mortgage lending?
You can argue as much as you like that all banks today meet their customers halfway and reduce the requirements for potential borrowers, however, the fact remains: information about the total experience and activities of an individual in the last job is still considered when applying for a mortgage loan. How can this be explained?
The total length of service, as well as the period of employment of the client at the current place of work, is a simple and reliable indicator that allows the bank employee to draw a correct conclusion about the nature of the applicant’s employment and his financial reputation. Individuals registered officially are of much greater interest to credit institutions, and this is understandable:
- having experience for a certain period will allow the borrower to confirm his income without any problems;
- the credit risks associated with the occurrence of difficulties in repaying the mortgage are significantly reduced.
Any bank offering mortgage products to its clients voices a requirement to satisfy the application, compliance with which is a prerequisite. One of the key such requirements for borrowers is the minimum length of service in the current place and the general length of service of the employee as a whole.
Most banks consider clients with a total work experience of one year or more. In the last place of work in some credit institutions it is required to work more than 1 month, in others – 3, 4, 6 months.
What to do if the total job experience is less than a year?
At first glance, there can be only one outcome of the case – the bank’s refusal. However, there are several solutions to this problem.
The first is that for some clients, several lenders can make certain concessions, namely, lower the minimum threshold for general employment. These clients usually include participants in salary projects and employees of important partner enterprises.
According to the second option, some banks may meet halfway with a potential borrower, whose total work experience does not quite reach the required period. For example, if a person has worked for only 10-11 months and meets all the other requirements of the credit institution, then the bank may agree to issue a loan. This is done, as a rule, if the lender is interested in the upcoming transaction.
Mortgage without job experience
Borrowers who do not have the opportunity to prove their employment or are just starting their careers also have a chance to get a mortgage. These borrowers include freelancers, entrepreneurs without a legal entity, engaged in creativity, real estate leasing, etc.
How long you must be at a job to qualify?
It depends on mortgage type. Let`s look to some of mortgage types
According to conventional mortgage, generally requires min 2 years experience to be qualified.
However, if borrower provide “positive factors” , it will compensate shorter employment history. The “positive factors” can be :
- A letter explaining for job change
FHA mortgage employment rules, more lenient about employment history. According to FHA loan guide, statement about your past work experience in the current position not required.
VA mortgage employment rules allow borrower to qualify with less than 2 years of job experience. The lender requests following documents, work history and request proof of appropriate schooling or military service.
USDA mortgages provide with many benefits, zero down payment requirement and flexible about credit score. They are also lenient about work history. According to USDA guide, no minimum length of time must work on their current position before applying for the loan.