Does changing jobs affect your mortgage pre-approval? Do you have to go through the process again?

By Michael Jensen, Mortgage and Finance Guru

Edited by Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience

Updated October 20, 2020

The answer to your question depends on if your type of employment, income and how you are paid changes with your new job. If your new position is similar to your old position, you are a W-2 employee, you earn a similar amount of income and you continue to be paid on a salary or hourly basis, then changing jobs should not affect your mortgage pre-approval.

If your new job has significant differences compared to your old job; however, your ability to qualify for a mortgage or the loan amount you are pre-approved for may change. Below we outline the key factors to consider if you change jobs after being pre-approved for a mortgage.

Job Probationary or Trial Period. If your new job has a probationary or trial period, lenders may require you to wait until the period ends before you apply for a mortgage. Depending on the length of the probationary period, this may delay your mortgage significantly.

Review Employment History Requirement for a Mortgage

Type of Employment. If you go from being a W-2 employee to being a 1099 contractor or self-employed, you may need to wait until you establish a one-to-two year self-employed job history before you can qualify for a mortgage. The job history requirement for self-employed applicants depends on the line of work you are in and how much money you earn so we recommend that you check with lenders to understand the guideline that applies to you.

How Much Money You Make. If your new job pays you more than your old job, then the mortgage amount you are pre-approved for should remain the same or potentially increase. If your new job pays you less, then the mortgage you qualify for likely decreases and you may be pre-approved for a smaller loan amount. Other factors such as your monthly debt expense, mortgage rate and loan program also affect the mortgage you qualify for.

Use ourMORTGAGE QUALIFICATION CALCULATORto determine the loan you can afford

How You Are Paid. If you go from being paid on an hourly or salary basis to being paid primarily from commissions or a bonus you may be required to wait before you can qualify for a mortgage. Lenders typically require a one-to-year track record of commission or bonus earnings to include that income in your mortgage application.

Work Schedule. If you go from being employed on a full-time basis to working part-time with your new job, this may impact how much money you make. If your earnings decline because you are working less then you may be approved for a lower mortgage amount. You should be sure to understand how your work schedule affects the mortgage you can afford.

Line of Work. In some cases, if your new job is in a different field of work, the lender may want you to wait several months before you apply for the mortgage. Guidelines on this point may vary and depend on other factors including your type of employment and income. For example, if your income and position are similar to your old job, you may not be required to wait before you can qualify for a mortgage.

In closing, you only need to go through the mortgage pre-approval process again if your new job is significantly different than your old job. The good news is that the process should be easier because you have been through it once before.

Use our free get pre-approved form to get approved for your mortgage. The feature is easy-to-use, no obligation and requires minimal personal information.

Sources

"B3-3.1-02, Standards for Employment Documentation."  Selling Guide: Fannie Mae Single Family.  Fannie Mae, October 24 2016.  Web.