Can I Get a Mortgage Without 2 Years of Work History?

While lenders prefer you have a solid record of steady employment and income stability, getting a mortgage without two years of work history is more than possible. Whether you’re working towards a certification that will boost your career or recently took time off to start a family, there are plenty of ways to prove that you’re financially reliable and a low lending risk. The key is understanding what lenders are looking for, as they evaluate your lending risk as it aligns with your employment history. 

By pre-qualifying with us at Zillow Home Loans*, you can determine which mortgage options will suit your needs based on your work history. Pre-qualification will also let you know which financial factors you need to work on before you officially apply for a mortgage.

How do lenders verify employment?

Generally, lenders will ask for the following documentation to verify your employment history:

• Recent pay stubs
• Bank statements
• Tax returns from the previous two years
• Proof of assets, such as savings, retirement, and investment accounts
• Proof of bonuses and overtime
• A letter from your employer stating your job title, hours, salary, and start date
• Verification of Employment (VOE), if you just started a new job 

Why do lenders prefer 2 years of work history?

Lenders prefer to see that you have at least two years of work history, as two years is considered enough time to demonstrate consistency, stability, and financial reliability. While technically a requirement per the Fannie Mae and Freddie Mac underwriting guidelines for conventional loans, this rule has varying exceptions among different loan types. These exceptions include everything from pursuing a certification for a specialization to active military duty. 

What are the exceptions to the 2-year employment requirements for mortgages?

If you have an employment history that’s less than two years or have a significant gap in employment, lenders will likely consider these additional factors and may still qualify you for a mortgage. Some common examples may include: 

• How your current job aligns with your previous employment experiences
• Whether you’re undergoing specialized training to obtain a certification
• You’re a current student or returning to school to pursue a degree in a specialized field
• You’re self-employed
• You served in the military recently
• You were on parental or maternal leave
• You recently retired and are using social security, pension, investment accounts or other means as proof of income
• An injury or illness affected your ability to work
• You’re a caregiver caring for a loved one during a time of hardship or illness

Lenders understand the common reasons for employment gaps and short work histories. However, when it comes to significant gaps in employment or career changes, they may request documentation from previous employers and a written explanation to evaluate your income stability.

How to get a mortgage without 2 years of work history

Apply for a non-qualified mortgage (Non-QM)

A non-qualified mortgage is a home loan that doesn’t come with the common loan guidelines set forth by the Consumer Financial Protection Bureau (CFPB). This includes how lenders verify your income and debts, limits for loan terms, debt-to-income ratio (DTI) standards, and more. 

Non-QMs are designed for borrowers with unique financial profiles, such as 

• Self-employed borrowers
• Real estate investors
• Borrowers with high debt loads or recent bankruptcies but are financially back on track
• Borrowers seeking interest-only loans or jumbo loans
• Borrowers who want to extend their loan terms to 40 years for lower monthly payments
• Borrowers with lower incomes but plentiful cash resources, such as a retiree who recently sold their business

Make a 20% down payment

Some lenders may require a larger down payment from a borrower with a light work history or significant employment gaps. Making a large down payment of 20% or more can also give you better approval odds, as it demonstrates that you have substantial funds that enable you to borrow less money, making you less of a lending risk.

Make sure you have good credit

Lenders will use your credit score and credit history to reference how you manage your debt obligations. While credit score requirements depend on the lender and loan type, having a credit score of at least 620 indicates a solid borrowing history and commitment to paying your debts on time. 

Provide alternate sources of income 

Providing documentation of alternate sources of income to show lenders, especially with gaps in your employment history, can help bolster your mortgage application. Alternate sources of income can include:

• Social security 
• Pension payments
• Disability payments
• Child support or alimony payments
• Structured settlements
• Annuity payments
• Investment income

Consider less favorable loan terms

Significant gaps in your employment history may impact your mortgage rates, as lenders may attribute these gaps to a higher lending risk. This means you may only qualify for a home loan with higher interest rates. But keep in mind, you can refinance your mortgage at any time. 

Find a co-borrower or co-signer

Another option is to apply with a co-borrower or co-signer with a solid work history. A co-borrower is someone who will be financially responsible for the mortgage and likely occupy the home with you, whereas a co-signer is only financially responsible for the mortgage if you default on the loan. Unlike a co-borrower, a co-signer will have no legal rights to the property. Having a co-signer or co-borrower can help you qualify for a mortgage with a light job history, but also help you qualify for better rates and terms.

Consider a government-backed loan

Government-backed loans, such as FHA, VA, and USDA loans, have less strict work history requirements than conventional loans. This is because the government guarantees government-backed loans, while conventional loans require private lenders and banks to take on the lending risk. Depending on your employment history and current financial situation, a government-backed loan may be a viable option.

Can I get a mortgage with less than 2 years of self-employment?

Self-employment may not be evaluated the same as a more traditional work history, but you can still get a mortgage as long as you have a steady and reliable income. As someone who is self-employed, demonstrating consistent cash flow is key to getting a mortgage with less than two years of work history. Find a lender and loan program that works with your self-employment lifestyle, which starts with mortgage pre-qualification. 

Can I get a conventional loan without 2 years of employment? 

While conventional loans typically require a two-year work history, you don’t have to be in the same job for two years. You can change jobs, as long as you provide an explanation for the change and how your previous work history relates to your current position.

Lenders can work with a firm offer letter or new hire contract for a job you will start prior to closing on your home purchase. They will need to verify your start date, salary and other information with the new employer. If you just graduated college and accepted a new job, a lender can use that offer letter or contract to verify your income and other necessary information. The same is true if you’re working toward a degree, specific certification program, or pursuing an internship that led you to a new job.

Can I get an FHA loan without 2 years of employment?

FHA loans typically require a two-year work history and six months at your current job if you have gaps in your employment history. While FHA guidelines state that prior work experience in your current position isn’t a requirement, lenders will want proof that you’re qualified for your current position and likely remain there or gain a better position in the future. 

Can I get a VA loan without 2 years of employment? 

VA loans require at least two years of schooling or military service. If you’re on active duty, you must have more than 12 months of duty from your official discharge date. Lenders may also request proof of continued employment from your current employer, and they’ll likely consider your past training or relevant experience to prove you’re qualified for your current position.

Can I get a USDA without 2 years of employment? 

USDA loan guidelines don’t require a minimum length of work history in your current position. However, you must prove two years of previous work history with an explanation for any job changes or significant employment gaps. Proof of working toward a college degree or military service also counts toward work history for USDA loans.  

To qualify for a USDA loan with a new job, you must also show proof of stability in your current position and that your annual income does not exceed 115% of the area’s median income.

*An equal housing lender. NMLS #10287