Making a job change is usually an exciting, and somewhat nerve wracking occasion. The anticipation of a learning curve and training, the annoyance of a change in schedule or winding down work already started. Add on top of all that a relocation or a move to the mix, and that opportunity starts to look like an awful lot of anxiety.
If a home purchase is involved with a job change, it’s important to know what your options are for a relocation mortgage or getting a loan for a job you haven’t started yet.
The Paystub Myth
Lots of people think they need to have a pay stub in order to get approved for a mortgage. Why do they think this? Because a lot of lenders even believe this is true. And it is partially true. For delivery of a loan to Fannie Mae (think most conventional loans), a pay stub is required. But that doesn’t mean a lender can’t close and fund a loan, and deliver it later. It comes down to a lender’s risk appetite.
Freddie Mac, the other outlet for conventional loans, doesn’t even require a pay stub at all. Neither does HUD (neither FHA nor USDA loan require a pay stub prior to closing).
Bottom line, if buying a home before you start your new job would make your life easier, you’ve got plenty of options to do just that.
The Job Offer Letter Mortgage
With a job offer letter mortgage, you can qualify to buy a home with a non-contingent offer letter from a future employer. Obviously, the offer has to be accepted before we can move forward with funding a loan. And what about the phrase “non-contingent”? Well, that means there can’t be unreasonable barriers to the offer being carried out. For example, a recent law school grad cannot use a job offer letter that’s contingent on passing the Bar exam.
A job offer letter must clearly outline employment terms – namely salary and start date. If that info is present and the income isn’t variable or commission-based, a lender can approve and fund a loan with nothing more than the offer letter for income documentation.
What types of loans are eligible?
Conventional loans (as little as 3% down) are able to be approved with a job offer letter (per the above – it must be a Freddie Mac loan, and must be on a primary residence). FHA loans (as little as 3.5% down, and able to use HUD-approved down payment assistance program) can be approved with a job offer letter, too! For our Veterans, VA will also accept a fully executed, non-contingent job offer letter as evidence of income to qualify.
As you can see, there are many options for someone wanting to buy a home before the start date of a new job.
Who Is a Job Offer Letter Mortgage Good For?
Anyone with a firm job offer letter that outlines a start date and base salary can use their letter to get a mortgage closed and funded before their start date. Generally, the loan must close within 60 days of the employment start date, and lenders may require a borrower to have adequate funds to cover house expenses before the new salary will begin.
The program is especially beneficial for relocating professionals that want to buy and settle into a new area before their new position begins. It is also a big hit with teachers and others in academia who often don’t see income until the start of a school year. Any type of seasonal work can benefit tremendously from using a job offer letter mortgage.
Important to Remember
Not all lenders are created equal – many lenders will have the “we need a pay stub” overlay, but at Mason Mac, we can work with your job offer letter and get your loan approved and closed without a pay stub.
If you have any questions about your job offer letter scenario, or the need for a mortgage while relocating, please give us a call today or get an immediate response by asking an expert here!