Qualifying for a Home Loan-Gaps in Employment


Qualifying for a Home Loan with Gaps in Employment

Did you know gaps in employment can make qualifying for a home loan difficult. Have you had periods of unemployment and wonder about qualifying for a home loan with gaps in employment?  Imagine that you are shopping for a home loan and you decide to prequalify yourself using online applications.  You get multiple calls from many different lenders.  Your monthly income is decent. Add a great credit score, and  12 months of verifiable rental history.  You get great news that you appear to be eligible based on your monthly income and your great credit scores-  the lender calls you and asks for documents such as paycheck stubs, W2s and tax returns, and asks about your job history.

Denied for Mortgage Loan Because of Insufficient Employment History

You disclose that you have only been at your present job for 6 months.  You had a short period of unemployment, maybe two months or four months? As a result, you collected unemployment and this shows up on your tax return. This is a not good when you are trying to qualify for a mortgage loan.  It could mean the end of your deal.

How Can I get a Home Loan with Employment Gaps?

Qualifying for a home loan with employment gaps is possible. As a matter of fact, there are a handful of banks out there willing to take you on as a risk. There are many ways to work around this scenario. First, we can take your W2s for the past three years and average out the income to get your gross monthly income.  In this case, if you are in a new career field and you have been at your job less than two years, the average W2 income will be used and not your current monthly income. Average W2 income, coupled with verification of employment from your employer can likely be sufficient documentation to qualify for a mortgage loan with employment gaps.

Getting Approved for a Mortgage Loan with Employment Gaps Using Bank Statements

Again, qualifying for a home loan with gaps in employment can be done using other documentation.  Sometimes, on a case-by-case basis, 12 months of bank statements can be used instead of tax returns,  to support income.  In most cases, the bank will want an explanation of any deposits that are not employment income.

Getting A Home Loan- I Just Got a Raise- How Much Can I Borrow?

You can qualify for a home loan using your most recent 6 months of income.  However, the bank will probably request your last two W2s and will verify your employment history via a Verification of Employment Letter to your current employer.  Alternatively,if this employment is likely to continue then the increase in income can be used to qualify for a home loan.  This is important because your monthly income is used to calculate the debt-to-income ratio.  The debt-to-income ratio takes in account your current monthly expenses divided by your currently monthly income.  This determines how much house you can afford.

How Can I Qualify for A Home Loan with Employment Gaps?

You can qualify for a home loan with employment gaps.  Talk to a Mortgage Loan Specialist or Mortgage Broker to see how you can qualify for a home loan today.  Contact Arlene Disessa at 530.813.0661 or email her at adisessa@rhloans.com. Arlene Disessa is an Editor in Chief of California-loans.com, a mortgage and real estate information center. Arlene Disessa has worked with borrowers who have been denied mortgage loans due to employment gaps and can help you achieve your goals of home ownership.



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