This scenario came up twice last week, so I figured it was probably blog-worthy. I’ve been working with two clients who are relocating for work and want to use the salaries from their future jobs as qualifying income for a mortgage loan. They would also like to close on the home and have a week or two to move and settle in before starting work. Is this possible? Well, it depends.
Several lenders require at least one paystub from a new job prior to closing, but a few will allow you to close without it. If you’re in this boat, below is an overview of lender requirements to use future income to qualify for a mortgage loan.
If allowed at all, lenders require some or all of the following:
- the borrower to begin employment within 60 days of the mortgage note date. (A few require the start date to be prior to the first mortgage payment or even prior to closing.)
- the mortgage loan to be for a purchase transaction secured by a 1-unit primary residence.
- cash reserves to cover the mortgage for the time period of the employment gap plus up to 6 additional months.
- A fully executed employment contract with the start date, salary, and length of employment (a minimum of 3 years can be required).
- The employment contract should not contain contingencies and the terms must be deemed reasonable by the underwriter.
- a guaranteed, non-revocable employment contract.
- the borrower to begin employment within 60 days of loan closing.
- The borrower to have sufficient income or cash reserves to support the mortgage payment between loan closing and the start of employment.
Lenders may require…
- the borrower to begin employment and a VVOE (Verbal Verification of Employment) prior to loan closing.
- a pre-close review if recent major change in employment results in a significant change in type of income or there is a decline in income.
If you’re a teacher whose contract begins with the new school year or a physician beginning his/her residency, you may fall into this category. Feel free to contact me with your specific scenario to determine if your future income will meet one of our lender’s guidelines.