How Long Do You Need to Be Employed for a Mortgage?

It seems like home buying should be simple: you prove you have money in the bank to pay your loan with, then you get the mortgage and move in.

But unfortunately, it’s not always that straightforward. And after all your mortgage lender is taking a fairly substantial risk by fronting you a likely-six-figure sum. Usually, they need more than just your bank statements and a promise.

One of the most common parts of the mortgage application process is work history verification. Generally speaking, you’ll need to show two years of employment history to qualify for a conventional home loan.

That said, there are workarounds for qualified borrowers with a non-traditional income source or job history (such as self-employed borrowers and small business owners).

Let’s take a closer look.

What happens to my mortgage application if I don’t have a conventional employment history?

Here’s the thing: your mortgage lender doesn’t actually particularly care whether you’ve been happily working away at the same company for two solid years. (At least, probably not; we don’t know them personally.)

But they do have a vested interest in whether or not you’ll be able to make your mortgage payments. That’s why bank statements alone just don’t cut it: proof of existing funds or cash you’ve earned in the past isn’t the same as proof of continuing income.

That said, not every qualified borrower has been working at a W-2 job for two solid years, and lenders understand that. Even if you can’t show that you’ve been steadily employed with a “real” job in the same field for two years, you may still be able to get approved for a mortgage if you can prove your income.

How can I prove my income if I’m self-employed or about to start a new job?

Say you’ve gone through a job change, but are still ready to make a down payment and get situated in your new abode. Your lender may still offer mortgage approval based on a job offer letter, particularly if you work in a high-income field. If you have significant assets or investment income, those could be used as qualifiers, too. Unfortunately, unemployment income usually can’t be used to qualify for a mortgage.

At Quontic, qualified borrowers don’t have to be at the same job the whole time, but they still must be in the same line of work for that period, typically without gaps. There are some exceptions, for example, if the borrower was only employed 1 year because they were enrolled in school before that. 

Married borrowers, good news: your spouse’s income, if high enough, could be used in qualifying the pair of you for the mortgage, even if you have employment gaps or haven’t been in your current job for very long.

And self-employed borrowers, take heart: lenders are growing increasingly understanding of the independent contractor lifestyle, especially as more and more of us pick up side hustles or churn out a living on the gig economy. Quontic is considered a top lender for self-employed borrowers, they don’t need to be self-employed for 2 years, but they need to have been self-employed at least the last 12-months, and 2 years in that line of work. (think manager of a restaurant and then owner of a restaurant).

When it comes to mortgage loans for self employed borrowers, your employment history will still be considered. Again, it’s best if you have a record of two years of self-employed earnings in a consistent line of work to qualify for a home loan, though you may also qualify with one year of self-employment and two years in a comparable non-contract role. You’ll likely be asked to provide your tax returns in order to prove this employment history and monthly income. In some cases, your lender may ask for a letter of explanation from your current employer or client.

Additionally, factors such as your credit score, debt-to-income ratio (DTI), and any negative marks on your credit history will come into play. But mortgages for self-employed borrowers are definitely available, and more lenders offer them than you might think!

Quontic, in fact, offers prime mortgage loans to qualified self-employed borrowers all the time! Our Community Development Loans, or CDLs, are specifically designed for non-traditional income earners, including entrepreneurs, small business owners, and independent contractors. Our holistic qualification process takes into account your entire financial history — not just your credit report or your paystubs. 

We also offer FHA mortgages, VA loans, and conventional loans for first-time homeowners, real estate investors, and those looking to refinance existing property.¹

Got questions? Our team of mortgage loan officers will be happy to help you determine which mortgage loan program may be right for you.