How Long Do I Have to Be Employed Before I Can Refinance My Mortgage?

Mortgage companies require each borrower to disclose at least two years of employment history when refinancing a home. The longer borrowers are employed with the same employer, the more stable the employment is considered. Mortgage lenders review the type of employment and correlating income as they determine the likelihood the loan will be repaid. One key question the employment history answers is if the borrower has the ability to repay the new refinanced loan. The employment criteria does not change if the loan is to purchase or refinance a home.

If you have a history of being in the same line of work and have just changed jobs, most lenders only require you to provide a pay-stub with 30-days year-to-date income to receive approval for a refinance loan. If you have a position that provides a contract the lender might even use the employment contract to document your income. If you just graduated from college and your degree directly relates to your new job, you will not have to wait to establish a work history prior to refinancing a home.

Commission income is treated differently than hourly or salary income by mortgage lenders. If the commission income is 25 percent or more of your gross monthly income, the lender may require a two-year history of income prior to allowing the income for qualification purposes. If you already have a two-year history of selling one product and you move to another company that sells the same product, you may not have to wait as long. If you are brand new to sales or the product you are selling, expect the lender to require a significant history prior to approving a refinance mortgage.

Mortgage lenders treat bonus income somewhat like commission income. Many lenders require a two-year history of receiving the income before they will allow it to be used to qualify. If you moved to a new employer and can qualify with just your base salary or hourly rate, then the lender shouldn’t make you wait beyond 30 to 45 days.

When you have a two- or more year history of working two jobs, the mortgage company allows this income to be included when refinancing a home. This second income can be seasonal, like retail jobs at Christmas or teachers who take second jobs during the summer. You just have to have a history of multiple jobs that are similar to the ones you have now.