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Potential mortgage lenders look at several areas of your finances when determining if you qualify for a given mortgage loan, and one such area is your current and previous employment history. As such, one potential issue that may arise during this process is if you have a significant gap in your employment sometime during the last two years, which is usually the period for which lenders want to view your history.

At Primary Residential Mortgage, we’re here to help walk you through the proper approach if you have a significant employment gap in your recent history as you apply for one of our numerous Tulsa home loans. Let’s go over what defines an extended absence in the mortgage world, plus some other factors to consider here and what to do if you have such an absence on your history.

Extended Absence Definition

Generally speaking, the FHA and other mortgage lender groups use the six-month mark as the basic threshold for what’s considered an extended employment absence. If you have a gap of just a few months, this usually will not ding you in any significant way – a year, however, and you could have some issues.

As we noted above, the general period looked at here is two years into the past. If you have mitigating circumstances involved, such as maternity leave or temporary disability, lenders will generally give some leeway as long as there’s evidence you had the intent to return to work as soon as possible.

Frequent Employment Changes

Another area that lenders look at in this realm is frequent job changes within a given period of time, usually a single year. If you have changed jobs more than three times within such a period, this will generally be at least a minor red flag for lenders.

However, it’s important to note that if the nature of your job changes is positive here, lenders will usually be pretty forgiving. If you changed jobs multiple times because you were offered better income and stability in your new positions, this will usually be looked upon favorably.

How to Manage an Employment Gap

If you have an employment gap or frequent job changes you think could cause some fuss with lenders when applying for a mortgage, here are some general approaches to take:

• Provide an explanation for the issue, preferably with documentation to back this up.
• Prove that despite your employment absence, you have still been paying previous rent or mortgage payments on time, and have maintained reasonable finances.
• If you can, avoid changing jobs just before applying for a mortgage. If you do, ask your employer for a role change letter if the change was internal, or send the lender a copy of your offer letter if you must move to a new company.
• If you lost a job but were not fired for cause, provide proof of this.

For more on employment gaps and changes and how they impact mortgages, or to learn about any of our mortgage loan programs, speak to the staff at Primary Residential Mortgage today.

*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.