Mortgage and Housing

How To Get A Home Loan Without 2 Years Of Employment?

One of priority requirements for lenders is having 2 years of employment history or in your business as self-employed borrower. But if you do not have two years of employment and want to get home loan, you are having troubles in finding only few lenders.

Why it is important to have two years of employment? 

To be qualified for conventional loan your work history must match with Fannie Mae and Freddie Mac guidelines. Almost all traditional banks following those rules. According to with Fannie Mae and Freddie Mac guideline require a minimum FICO credit score of 620 to qualify.

Is it possible to get mortgage without two years of employment?

You can get home loan and buy your dream house, even if you do not have full two years work experience. But it will be possible through untraditional program. You need to provide a proof that you are working and having steady flow of income.

This article will try to help you to provide information to be approved for having mortgage without two years of employment.

Requirements for getting a home loan without two years of work history.

Below you will find requirements for applying for a mortgage without two year work history:

 Employment Requirement

You need to prove that you are currently employed. You can do this by providing a letter from your employer or any other document that proves your employment. If you have your own business therefore you are self-employed your licence or letter from your accauntant proving that you are self-employed.

Income Requirement

If you are W2 wage earner, you have to provide at least month pay stubs and qualify using gross income. Bank statements showing deposits into accounts have to be provided by self-employed borrowers.

Down Payment Requirement

The minimum down payment requirement will be 15% because of your credit score and ability to document your income.

Credit Score Requirement

Your credit score requirement should be at least 500. But in case if you have lower score it will be impacted on your down payment requirement and rate.

Tax Returns and W2’s

If your tax returns and W2 wages are available you have to provide them. An accountant is able to ask self-employed borrowers about providing a P&L statement.

Bank Statement Requirement

In order to prove that you have the down payment amount and any reserve requirements, for W2 wage earners have to provide the bank statements for the last 2 months’. For self-employed, depending on the duration of your business you will be asked to provide bank statements up to a years worth.

Additional Asset Documentation Requirement

Additional documentation, such as brokerage statements, other real estate and retirement accounts, may be requested to help you with approval.  Your willingness to provide these assets will help you to support your mortgage application approval.

Conclusion

Let’s imagine that you got a job a year ago and this is your first experience. In this case, the bank’s decision will mainly depend on the size of your earnings – whether it allows you to master the payments or not. If the client’s track record includes several years, during which he managed to work in different companies, then here the work experience for a mortgage can play not only a positive, but also a negative role. This will be especially relevant for those who have often changed employers or have not been able to move up the career ladder over the years, since banks are wary of such persons.

A similar concern can be caused by those who, having barely started working, managed to move from ordinary employees to the category of managers, as well as those whose salary level clearly does not correspond to experience.

So, the length of service for obtaining a mortgage is an important and far from the last factor that is taken into account by bankers when assessing a potential borrower.

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