I Just Graduated College and Got My First Job. Will I Be Able to Get a Mortgage?

Graduating college is a huge milestone, as is starting a job. And if you've recently done both, you should have a lot to be proud of.

In fact, if your salary is decent enough and you have some money in your savings account (say, from a job you held down during your studies), then you may be inclined to try to buy a home shortly after college. That way, you don't have to spend money on rent only to get no equity in return.

But will you be able to get a mortgage when you're fresh out of college? That depends on a number of factors.

How to qualify for a mortgage

Mortgage lenders look at different factors when determining whether to approve loan candidates or not. These include your:

• Credit score
• Debt-to-income ratio
• Income

Let's say you're looking to borrow $200,000 for a home purchase. It stands to reason that your lender will need to see that your income is high enough to cover your monthly payments for that sort of loan. 

Many recent college graduates don't end up earning a lot of money right out of school. But perhaps you majored in a subject that set you up for a higher-paying job right away. If so, and your earnings are such that you can cover your mortgage with ease, then you might manage to get approved. But you may not get approved if you're earning a lower wage. 

Your mortgage lender might also want reassurance that your job is stable. If you've only been at it a month or two, your lender might feel that approving your loan is risky. To that end, you may need to get a letter from your employer explaining the terms of your employment. If your company confirms that you're filling an essential role that's unlikely to go away, that might help you get approved to borrow for a home.

But even if your salary is high enough in theory to help you qualify for a mortgage, the other factors that go into that decision might trip you up. Let's say you took on a lot of debt in college because, well, you were in college. If your debt-to-income ratio is high because of that, you may not get approved for a mortgage.

Similarly, if you're applying for a conventional loan, you'll need a minimum credit score of 620 to get a mortgage. But if you're working your first job and, as such, have never really had bills in your name up until a couple of months ago, you may not have enough of a credit history to establish a credit score, or a good one. So that, too, might be a barrier to getting mortgage approval.

It's worth a try

If you feel like you're in a strong position to buy a home now that you've graduated college and are gainfully employed, then there's nothing wrong with applying for a mortgage and seeing what happens. But don't be shocked if you encounter some challenges in the course of getting approved -- especially if you're only earning an entry-level wage.