My Job Is at Risk Due to COVID-19. Should I Still Buy a House?

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Buying a home when your income is questionable is a risky move -- but one that could still work out under the right circumstances.

Buying a home when your income is questionable is a risky move -- but one that could still work out under the right circumstances.

A couple looking at a home with a realtor.

Image source: Getty Images

Buying a home is a major financial move -- one you really don't want to wind up regretting. Right now, mortgage rates are extremely low, and though home prices have climbed in recent months due to lack of inventory, it is still possible to snag a great deal on a house. But what if you've found a place to buy, yet you're worried about losing your job during the COVID-19 pandemic? Should you move forward with that home purchase, or put it on hold?

When your job doesn't feel secure

There are several factors mortgage lenders look at when determining whether applicants will qualify for a home loan. These include:

  • Your credit score -- the higher, the better, but you generally need a score of 620 or above to get approved for a mortgage.
  • Your existing debt -- as measured by your debt-to-income ratio
  • Your existing assets -- including the money available for a down payment
  • Your income -- how much it is and whether it's stable

You may get tripped up with the last if your job is at risk due to the pandemic. Or not. When you apply for a mortgage, you're required to submit pay stubs as proof of earnings -- usually a few pay periods' worth. You also tell your lender how long you've been with your employer, and your lender may seek to verify that by requesting a letter from the employer confirming your length of work history, and that you're an employee in good standing.

If your employer is able to confirm all of that, but your job is on the line because your employer has suffered a decline in revenue (a common occurrence during COVID-19) or you work in an industry more likely to get hit by the pandemic, you might manage to keep that under wraps and still get approved for a home loan. But it's worth noting that if you do lose your job mid-mortgage application, that could hurt your chances of closing on that loan. And just because you can get away with hiding your job insecurity doesn't mean you should.

If you lose your job shortly after closing on your mortgage, you'll risk falling behind on your monthly payments. That, in turn, means you'll risk damaging your credit and, in a more extreme scenario, losing the home you just bought.

That said, if you have a healthy level of savings -- say, enough to make a 20% down payment on your home and still cover six months or more of living expenses -- then you may be okay to move forward with your home purchase, even with a shaky job situation. Remember, if you lose your job through no fault of your own, you'll generally be entitled to unemployment benefits that will replace a portion of your old paycheck. That income, combined with your savings, could be enough to keep up with your mortgage -- especially if you have a spouse or partner you're buying a home with whose job is more steady.

Therefore, while buying a home when your job is at risk is not optimal, job insecurity doesn't necessarily have to be a deal-breaker, especially if you have a lot of savings to compensate for missing income. Also, just because you're worried about losing your job, that doesn't mean that will actually happen. If you've managed to find a home at a great price and can qualify for a competitive mortgage rate, then it could pay to forge ahead, despite your concerns.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow