Can you change jobs while buying a house?

Some people will need to navigate a job search and the homebuying process at the same time. While it’s possible to secure both a new job and a mortgage during a short time period, it isn’t always advisable to do so. A career change can greatly impact your mortgage eligibility and not always in a good way. Let’s take a closer look at what you need to know about changing jobs while buying a house.

How your job affects mortgage eligibility

Mortgage lenders like stability, and they may not view a career change in a positive light. 

If you know you will likely switch jobs during the mortgage process, give your lender a heads up as early on as possible so they aren’t caught off guard. Holding off on a job search until after you close on the home can make the mortgage application process run smoother. 

For some, that won’t be a choice — like when you're moving and buying a house in a different state.

Both your job and your income are two major factors that come into play during mortgage underwriting. Lenders want to work with borrowers who held the same job for years and have a very consistent source of income. While a new job may seem like a positive, lenders can view a career change as unstable. This isn’t always the case though, so let’s review a few scenarios where lenders will and won’t see a job change as a good thing.

Should you change jobs while homebuying? 

Even though you can switch jobs while buying a house, you may not necessarily want to. Let’s look at a few times when it does and doesn’t make sense to look for a new job when you plan to buy a home. 

Reasons not to change jobs 

Certain career moves are a major no-go for mortgage lenders. While you may be happy to take on more relaxed hours, a shorter commute, or to join a great work culture, lenders often see a job change in a negative light, even if it feels like a major win for you.

Here are a few scenarios where a job change isn’t likely to fly with a lender: 

• You’re switching from a salaried pay structure to a bonus or commission pay structure. The lender may want to see 12 to 24 months of work history and income under a non-salaried pay structure. 
• You’re changing from a W-2 employee to a 1099 self-employed contractor. Again, the lender may require you to be self-employed for 12 to 24 months and earn income consistently before they will approve your mortgage loan. 
• Your new job is in a different industry. A new job in the same field can show a level of consistency to lenders, but if you pivot to a different industry this can make them nervous about your potential to earn the same amount of money that you did before.
• You have a history of job hopping. If you have a varied career history that involves switching to a new job every few months or once a year, adding another career change while you're in the midst of applying for a mortgage loan can spook lenders.
• The new job is temporary. If you take on a seasonal job or a job with a predetermined termination date, it's hard to qualify for a home loan when the duration of the job will be less than three years. The lender wants to make sure a borrower can afford their mortgage for the long haul.

When to consider changing jobs

There will be times when a job offer is too good to pass up even if you are in the middle of finalizing a mortgage loan.

Here are a few different examples of when a career move isn’t likely to scare off your mortgage lender. 

• You’ll be working in the same industry and earning a higher income. If you accept a new role with better pay in your current industry, the mortgage lender will likely see this career move for what it is — a chance to make advancements in your career and to earn more money, both of which increase your odds of making mortgage payments. 
• You move to a new company after several years. If you spend ten years at the same company and now a competitor came along and scooped you up with a better offer, your lender will understand that your career path has been consistent and stable. 
• The new job is a major step up. If a new job is clearly an advancement — like going from working as a manager to being a director or VP — the lender will likely recognize that you’re making progress in your career and that the opportunity was too good to pass up, especially if it comes with a lengthy contract. 

Related: What to know about getting a mortgage if you're self-employed

What mortgage lenders need to know about a job change 

While all mortgage lenders have different lending standards their applicants must meet, they generally look for applicants with a two-year work history. If you weren’t employed in your current role for two years (which would be the case if you switched to a new role during the process of applying for a mortgage), the lender will want to know the following information.

• Why you changed jobs 
• How often you change jobs 
• If you experienced any periods of unemployment 
• The current strength of your industry and employer 

Right before you close on a home, the lender will want to verify that your income and employment status didn’t change since you sought out pre-approval for a mortgage. This is why it’s better to be proactive and inform your lender of a career change as soon as possible. The truth will come out eventually, so it’s best to get ahead of it and prepare accordingly. 

→ Learn more about when you're clear to close your mortgage

You may need to present the following information to your lender if you switch to a new job after the pre-approval process. 

• Your offer letter or title change letter 
• Written or verbal Verification of Employment (VOE) from your employer 
• Your most recent pay stub

→ Learn more about what documents needed for a mortgage application

How to buy a house while changing jobs

As noted earlier, sometimes you have no choice but to pursue a new job while you are knee-deep in the homebuying and mortgage process. Whether you need to find a new job and house in a new location, get a job offer that's too good to pass up, or simply know the timing is right, it is still possible to find a new job and secure a mortgage in the same time period. in some cases, it’s even possible to obtain a mortgage if you don’t have a job.

Remember — this only works if the new job is a clear step up from your old one. Becoming an entrepreneur or making a major career change in a different industry can be disadvantageous in the midst of buying a home. Take some time to think about how your career move will look to a lender before you finalize it. 

Even if you succeed in obtaining a mortgage, a lack of perceived job security and a change in income can impact the interest rate you receive and how much you will pay in interest over the life of your loan. If you need to make a big career change right now, you may be better off waiting a bit longer to buy a home. 

If you can afford to, you can buy a home with cash and avoid the whole mortgage approval process altogether. As a bonus, an all-cash offer makes you a more competitive buyer, speeds up the closing timeline, and makes it so you avoid paying mortgage loan interest rates and fees.