How does a break in your employment due to a National Guard deployment affect your ability to qualify for a mortgage?
Thank you for your service to our country. The good news is that a break in your employment due to your deployment should not impact your ability to get approved for a mortgage.
First off, military service including the National Guard is considered employment according to mortgage qualification guidelines so when lenders review your job history, they do not really see a break. As long as you have a returned to work and have a one-to-two year employment history, including your National Guard duty and your jobs prior to your deployment, then you should satisfy the employment requirement for a mortgage.
When you apply for the mortgage lenders are required to verify your current employment as well as your military service. You are also required to provide at least two pay stubs for your current job so that the lender can confirm your income and employment status.
Please note that you are not required to return to the job you held prior to your deployment but if you change jobs and your new position has a probationary or trial period you are usually required to wait until that period ends before you are eligible for a mortgage. Additionally, if your type of employment or how you are paid changes, you may also have to wait before you can apply for the loan.
For example, if you go from being a W-2 employee to self-employed or a 1099 contract worker, you may be required to wait one-to-two years before you can qualify for a mortgage, depending on your work history before you were employed, income level and other factors. Also, if you were previously paid on a salary or hourly wage basis and your new job pays you primarily through commissions or bonuses, then you may also need to wait before you can qualify for a mortgage.
If these circumstances do not apply to you -- your job does not have a trial period, you continue to be employed on a full-time basis as a W-2 employee and your type of compensation remains the same -- then you should be able to apply for a mortgage without delay.
The final point we should highlight is that your service in the National Guard may make you eligible for the VA Loan Program which enables you to buy a home with no down payment. The VA Program also offers more attractive mortgage terms including a lower interest rate and no monthly mortgage insurance.
The table below shows leading VA lenders in your area. We recommend that you contact multiple lenders to confirm their qualification requirements. Shopping lenders also enables you to find the best mortgage terms.
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Sources
"Chapter 4.2. Income – Required Documentation and Analysis." Lenders Handbook - VA Pamphlet 26-7. U.S. Department of Veterans Affairs, 2020. Web.
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