Life is unpredictable, and things can change in a matter of days — it’s no secret. Unfortunately, you could be offered your dream job in a new town, receive promising promotions, or even be left without a job when considering buying a house. It can be challenging to navigate your way around when big changes strike you in the middle of applying for a mortgage. I’m Jodi Habel, a seasoned mortgage broker with 15+ years of experience in Ontario. Today, I’ll guide you through all the frequently asked questions I get regarding the link between your employment status and getting the green light for a mortgage. That includes questions like does changing jobs affect getting a mortgage pre-approval, does unemployment make you ineligible for a mortgage, and so on.
Is Buying A House Without A Job Possible?
If you are temporarily unemployed, are a stay-at-home parent, or do not have a permanent job for any reason, you may be wondering “Can I get a mortgage without a job in Canada?” Believe it or not, what’s important is that you have a source of financing to qualify for a mortgage, and that source of financing doesn’t necessarily need to be from a permanent job. In order to know how to get a mortgage without a job, you need to be informed about the possible options. However, every case is unique, and it’s important to consult with a mortgage broker to understand the best plan of action for you.
Here are a few instances when you can get a mortgage without a job:
- You have a co-signer on your mortgage. For example, a partner who is in sufficient financial standing to be approved for a mortgage.
- You regularly earn money from passive streams of income from investments or other prospects. For example, you earn income from a rental or investment property.
- You will offer a high down payment that is upwards of 35%. For reference, the average down payment range is from 10-20% but can be as low as 5% based on eligibility.
Does Changing Jobs Affect Getting a Mortgage?
A pay raise or an out-of-the-blue job loss can happen while you are applying for a mortgage. So does changing jobs affect getting a mortgage application approval or denial? Yes, depending on how much of a drastic change is occurring.
Here are a few vital things to consider when applying for a mortgage with a new job or change of employment status:
- You may willingly or unwillingly become self-employed. While it’s possible to secure a self-employed mortgage, it can be more difficult if you just started your own business and don’t have an income history.
- Lenders look at how long you’ve been in a job before considering the employment as stable. Typically, they want to see 2+ years of history at your current employment with a stable and favorable salary. You can be approved with less than 2 years of history depending on the type of employment that you have.
- Does changing jobs affect getting mortgage approval if you get an equal salary (or more) salary than your previous one? Most likely not. You will still need to inform your lender about the change anyway.
- Does changing jobs affect getting mortgage approval if you move from a stable position to a commission-based one? Most likely, yes. A job with inconsistent or fluctuating pay may make you less reliable in the eyes of a lender and you will require a long history in this type of position.
- Even if you witnessed a drop in salary, you could support your application with other means of financing (if applicable). That includes but is not limited to return on investment from stocks, alimony, child support, child tax benefit and cash savings. Try to compensate for the loss.
If possible, consider changing jobs after you have your keys in hand to your house. It is advisable to discuss any potential job changes with your mortgage broker before the change to ensure the process of obtaining a mortgage approval is stress-free.
What’s The Process Of Applying For A Mortgage With A New Job?
The important action you need to take if your employment status changes in the midst of applying for a mortgage is to notify your mortgage lender as soon as possible. Don’t wait until the final check-up right before closing for them to be informed of your change of status. They will be able to provide you with more information moving forward. For example, if you received a promotion, that may not affect the process at all. While on the other hand, if you experience a salary drop, you may no longer pass the mortgage stress test.
Do Mortgage Lenders Verify Employment And How?
Yes, mortgage lenders will reach out to your employer to verify information about your employment status. It is often in the form of verbal verification via a phone call, but can also expand to include additional inquiries if there are any doubts regarding your employment. Your lender will also refer to the employment history letter for mortgage applications that you provide.
How Many Times Do Mortgage Lenders Verify Employment?
Your mortgage lender will assess factors like your position and salary when you provide them with a letter of employment for mortgages in Canada from your employer. They may also call your employer for verbal verification regarding your employment status. In some cases, the mortgage lender will also do a quick check-up right before closing to ensure nothing has changed in your financial status. If there are any changes to your employment status, such as a promotion or loss of employment, then you may be required to take extra steps that will prolong the process.
How Long Does Employment Verification Take For A Mortgage?
Your employment is verified during the underwriting process, and it may take anywhere from a few days to a few weeks before your loan is cleared to close.
Can You Buy A House If You Work Part-Time?
Can you buy a house without a full-time job? The simple answer is yes. Let’s go into more detail though. You may have a part-time job that is well-paying and more than the average full-time job employee who is qualified for a mortgage. These cases certainly occur less often, but they are possible! Your application will still be reviewed with the same criteria as a full-time worker. That means your credit score, income-to-debt ratio, and salary will all be considered to determine if you get the green light on a mortgage.
Don’t forget that I provide the full spectrum of mortgage broker services in Ontario. Let’s get in touch today to discuss how I can help.