Getting a mortgage with no job is pretty much impossible now, but how does one get a job with spotty, or complicated,  employment history?

 

Most lenders want to see two years consistent work history as well as [now] a hope for continued employment in one’s job. Over the past few year, thousands of people in all industries and employment levels have been hitting the unemployment line. While waiting for the smoke to blow over, people have been doing all sorts of things such as going back to school, learning a different trade or starting a new career. When this bad economy turns around [and it will], how is one to get a mortgage with unusually employment history?

 The key is to keep a record of employment and pay history. The lenders will always want to see two years history, but they will have to allow spotty history.  Below are three scenarios of American’s current job affairs:

 

1. Unemployed/Gap in employment: if one is unemployed and collecting unemployment compensation, this may count as income. However, can we view it as part of one’s job history? I think not. If a person is let’s say an engineer who was laid off in March of 2009 and remained unemployed until March of 2010. In March of 2010, that person was lucky enough to land another job as an engineer, in a completely different industry, but with the same pay scale. In order to apply for a mortgage, the person would need to show the previous job, explain the gap as looking for a job and document the new job and salary. The issue is the long period of employment, which is explained by the state of the economy. The plus would be the new job in the same industry. I would suggest having the new job for several months before applying for a mortgage.

 

2. Education: Many people have taken the twist to go back to college or trade school to either pick up their current skills or learn a new set. If there is a gap where a person takes the time to educate themselves, this could count as “employment” time in the eyes of the lender. If the engineer went back to school to become an accountant, and takes a job working at an accounting firm, well that would look good. The new job should have a history of at least 12 months. The lender will add the education and 12 months work history together to meet the two year employment requirement and will be ok with the change in careers. The fact that they changed career is ok, if the new career is stable; not as if he joined the circus. The lender will look at the old job, education and potential for continued employment in the new profession.

 

3. Self employed/consultant: If one loses their salaried job and decides to make a go of it as a consultant, this is more difficult. It is preferable to consult in the same industry as you worked in. Proving that you had stolen many of your clients from your old boss which is why you will be able to make a go of it, is a plus. However, if you switch industries and begin consulting circus layouts, well the risk might be greater there. There is typically three years history required for the self employed, however less is fine if it is in the same industry as before. Two years with tax returns, an increasing cash flow and proof of future business and stability is required. The lender will look at industry, education and potential for future income.

 

The key will be the stability of the new job, not how much time you were unemployed in between. The banks will have to look at employment with a greater eye in the future. Compensating factors such as education and new job stability will be weighted more than time on the job. Just remember, you are not alone!

 

Dale Siegel