Here's What Happens When You Get a New Job Right Before Applying for a Mortgage

If you're in the market for a new job this year, you're not alone. Data from Monster.com shows that 96% of workers are seeking out a new job in 2023. But while a new job might do a lot of good things for your finances and career, it might also cause some problems if you have near-term plans to apply for a mortgage.

Why a new job could be problematic

Mortgage lenders look at different factors to determine whether to write a loan or not. These include:

• Your credit score: A strong credit score suggests that you're likely to repay the money you owe.
• Your debt-to-income ratio: This is your current debt relative to your income. A lower ratio indicates that you're not overextended and are therefore more likely to be able to keep up with a mortgage.
• Your income: You need to earn enough to be able to repay the sum you're borrowing for a home.
• Your employment history: Lenders like to see a streak of steady employment from applicants.

It's that last point that could be a problem if you get a new job right before you apply for a mortgage.

Lenders want reassurance that you're not just employed, but in a stable job. After all, a mortgage is something you're likely to be paying off over a long period of time, so lenders really want to see some semblance of steady employment before loaning you money. If you get a new job right before applying for a mortgage, a lender might wonder whether that job is really a keeper.

That's why it may be a better idea to hold off on applying for a new job until your mortgage loan is finalized. If you know you'll be applying for a home loan this summer, for example, then you may want to put your job search on hold until the fall.

An exception to this rule

In some cases, getting a new job right before applying for a mortgage could be problematic. But things might shake out very differently if you've gotten a new job at the same company you've worked at for years. Getting a promotion, for example, is not going to reflect poorly on you from a borrowing standpoint.

Similarly, if you get a new job in the field you've worked in for years, that may not be a problem, either. If you have five years of marketing experience and get a similar or better role at a new firm that has you doing the same tasks (and for the same or better pay), your lender might take comfort in the fact that this is what you do for a living and are simply doing it elsewhere. But if you go from five years of accounting to suddenly working in art sales, that's a different story.

All told, mortgage lenders want reassurance that you'll be able to repay your loan. If you can show that you're likely to be able to keep up with your payments, then you're more likely to get approved, even if you've recently started to work in a new role.