Mortgage lenders do require a two-year work history to be reported on the loan application, but it is not required that you work for the same company for two years in order to qualify. The lender will review the history to make a determination that your income is consistent, stable and likely to continue.
You'll likely need at least two years of reliable income if you mainly earn bonuses, overtime, commission, or self-employment income. If you take on a second, part-time job for extra earnings, you'll need a two-year history in that job for lenders to count the additional income. There are no exceptions to this rule.
The majority of mortgage lenders require you to provide one to two years of tax returns. However, there are a small handful of lenders who may be willing to process a loan without seeing your tax returns.
Income requirements for a mortgage:
You need a reasonable debt-to-income ratio (DTI) — usually 43% or less. You must have been earning a steady income for at least two years.
Yes, it's possible to qualify a mortgage without 2 years of work history. It may require more documentation, though. In addition to the usual things like W-2s, 1099s and pay stubs, you may need things like letters of explanation or statements regarding the likely continuance of your income into the future.
The Bottom Line. On a $70,000 salary using a 50% DTI, you could potentially afford a house worth between $200,000 to $250,000, depending on your specific financial situation.
You can get a mortgage with no job but a large deposit if it makes financial sense for you. If you have a good credit history, lenders may be willing to look past your unemployment if you have cash reserves that will help you pay for the loan.
Most lenders will require 1-2 years of both personal and business (if applicable) tax returns when assessing your income level. This is because a mortgage loan is a long-term commitment, so they want to be certain that whatever monthly payment amount is agreed upon fits nicely into an affordable budget over time.
You can get a mortgage on your home even if you've been self-employed for less than 2 years. Ultimately, your business must be active for at least 12 consecutive months. And your most recent 2 years of employment (including salaried work and other forms of income in the same line of work) must be verified.
HUD, nonprofit organizations, and private lenders can provide additional paths to homeownership for people who make less than $25,000 per year with down payment assistance, rent-to-own options, and proprietary loan options.
Conventional loans
If you start a new job, lenders usually accept a job offer letter with a new employer (same industry or line of work) that can be used to verify your new employment, as well as a college transcript showing your education leading up to your current job.
Most traditional lenders require two years of consistent work history whether you are self-employed, or a w2 wage earner. This work history requirement is found in all Fannie Mae and Freddie Mac loans and is driven by the federal government.
Understanding employment history for mortgage requirements
Lenders want to ensure that you'll be able to repay them on time. This is why employment requirements for many mortgages usually include a work history of at least two years, as well as income verification.
It is possible to get a mortgage with less than 2 years of work history in certain situations. Lenders typically prefer a 2-year employment history but may make exceptions based on various factors. Recent graduates, career changers, and those with employment gaps may still qualify under specific circumstances.
The Bottom Line
If you're a seasonal worker, the key requirement to remember when applying for a mortgage is that you must be able to demonstrate a 2-year history of consistent seasonal employment and reliable income.
Because a mortgage commits you to years of payments, lenders want to make sure your loan is affordable to you both now and years down the road. To help calculate your income, mortgage lenders typically need: 1 to 2 years of personal tax returns.
Mortgage lenders usually verify income and employment by contacting a borrower's employer directly and reviewing recent employment and income documentation. These documents can include an employment verification letter, recent pay stubs, W-2s, or anything else to prove an employment history and confirm income.
Lenders typically want to see at least a two-year history of tax returns to verify that your self-employment income is stable and reliable. Fortunately, some borrowers can use just one year of tax returns to qualify for a mortgage.
The safe conventional way of doing things is to take 1/4 of your monthly income as your mortgage payment. For a 30k/year salary, your monthly payment should be around $625. If your loan is at 4% and you put 20% (like you should), with a 15 year loan, you could get a $105K home.
Can I buy a house with low income? Yes. There is not a specific minimum income to qualify for a mortgage and there are various loan types and programs designed to help eligible buyers cover a down payment or even closing costs.
An individual earning $60,000 a year may buy a home worth ranging from $180,000 to over $300,000. That's because your wage isn't the only factor that affects your house purchase budget. Your credit score, existing debts, mortgage rates, and a variety of other considerations must all be taken into account.
If you make $70,000 a year, your hourly salary would be $33.65.
According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment. Homeowners Insurance. Private mortgage insurance.