Changing Jobs While Buying a House in New Jersey: What Does Your Lender Look At?

You can change jobs while buying a house, but talk to your lender before you accept the offer or give notice, because your approval is built on your income and lenders check your employment again right before closing. Whether a new job helps, hurts or changes nothing depends on the kind of income it pays and how the timing lines up with your closing. A short conversation up front can save the purchase.

I'm Dennis Mark Interdonato with The Dennis Mark Group. New jobs and new homes tend to show up at the same time, and I see it with buyers all over Monmouth and Ocean County. I'm not a lender and I don't give lending advice, but I plan the purchase around the job change with you and your lender. Here's what the lender is looking at, from Fannie Mae's guide for conventional loans.

Why does a job change matter to your mortgage?

Your pre-approval is based on the income you have when you apply. Fannie Mae's Selling Guide tells lenders to look at your work history for a reliable pattern of employment over the most recent two years, and to carefully analyze any gaps in the most recent 12 months (Fannie Mae Selling Guide B3-3.2-02). A shorter history can still work when other strengths offset it. The same section also says borrowers who change jobs often but still earn consistent, predictable income are considered to have a reliable flow of income.

That's the guide for conventional loans sold to Fannie Mae. FHA, VA and other loan types have their own rules, and your lender will tell you which apply to you.

Does the lender check your job again before closing?

Yes. For borrowers qualifying with employment income, Fannie Mae requires the lender to verify employment no more than 10 business days before the note date, which in a purchase is generally your closing (Fannie Mae Selling Guide B3-3.1-04). In plain terms: if you leave your job the week before closing, your lender is going to find out, and your approval may have to be redone.

Can you buy a house before your new job starts?

Sometimes. Fannie Mae allows lenders to use income from a job you haven't started yet, under its rules for employment offers or contracts (Fannie Mae Selling Guide B3-3.3-03):

• The lender needs your fully executed, non-contingent offer or contract, showing the employer, you, the position, the type and rate of pay, and the start date.
• If the offer has conditions, the lender has to confirm before closing that they've been met.
• Under one option, which is limited to buying a one-unit home you'll live in, with fixed base pay only, your start date can be no earlier than 30 days before the note date and no later than 90 days after it.
• When the start date is after closing, the lender also has to document additional reserves or resources to carry you until the paychecks begin.
• The offer can't come from a family member or an interested party to the transaction.

That's why the date on your offer letter and the closing date in your contract need to be planned together.

Which kinds of job changes need the most care?

• Same kind of work, base salary. Usually the least paperwork. Your lender will still want the new pay documented.
• A move to commission, bonus or variable pay. Lenders look at variable income differently than base pay, so ask before you switch.
• Going self-employed. Fannie Mae has separate documentation and eligibility requirements for self-employed borrowers. More in buying a home after becoming self-employed.
• A gap between jobs. Even a short one can mean extra questions.

What should you do, step by step?

1. Call your lender before you accept or resign. Ask what the new job means for your approval, and what they'll need.
2. Get the offer in writing, with the pay, the start date and any conditions spelled out.
3. Keep your pay stubs and offer letter handy. The lender will ask.
4. Plan the closing date with your start date in mind. We write it into the contract, and New Jersey's three-business-day attorney review gives your attorney time to check the dates (N.J.A.C. 11:5-6.2).
5. Don't make other big financial changes before closing without checking with your lender first.

What if the new job is somewhere else?

Then the question may be bigger than the mortgage: sell the home you have, or rent it out? I cover that in new job in another state: sell or rent your New Jersey home, and if you're moving here for work, see relocating to the Jersey Shore.

How do I plan a purchase around a job change?

We start with your dates, not the listings: your start date, your lender's timeline, and the closing date that fits both. Then I send you the homes that match as they come up, so when the right one hits, you're ready. And if you find it early, buy it. You already know what you want.

Frequently Asked Questions

Can I switch jobs after I'm pre-approved?

You can, but tell your lender first. Your approval is based on your current income, and lenders verify employment again shortly before closing.

Can I get a mortgage with an offer letter?

In some cases. Fannie Mae's guide lets lenders use a signed, non-contingent offer when the terms and start date meet its rules. Your lender will tell you whether your loan qualifies.

Do I need two years at my current job?

Not necessarily at one job. Fannie Mae's guide looks for a reliable two-year pattern of employment, and a shorter history may be considered with offsetting strengths.

Can I change jobs after closing?

Your lender's employment check happens before closing. What you do after closing is your call, but ask your lender if you have any doubt.

This is general information, not legal, tax or lending advice. Your lender decides what income counts and gives the lending advice.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

• How Dennis Mark plans a move around a life event
• Plan it step by step with the free Life Events Guide.
• Selling too? Know your number with a free home value.
• More on what lenders check: income verification for mortgages in New Jersey.
• Going out on your own? Read buying a home after becoming self-employed.
• Have a question this didn't answer? Send it to Dennis Mark and it may become the next article.