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Income and Work History: Factors in Mortgage Approval

When working towards obtaining a mortgage, your income, work history and personal assets are all important factors. Banks will want to see verification your employment and financial information before moving forward with the loan process. This can be an intimidating process, especially for first-time homebuyers, but it is important to be well prepared when meeting with potential lenders.

Keep the following helpful information about what lenders consider when they are qualifying you for a loan in mind when as you begin to apply for mortgages.


Proving your income to the banks you are working with is an important part of the process. As such, bring important documents related to your income (for instance, pay stubs, W-2 forms and tax returns) with you when meeting with a potential lender. You will need to provide information about your employment, salary and bonuses as well as any other sources of income for the past two years. Generally, providing a consecutive two-year history of income will be acceptable when applying for Fannie Mae, Freddie Mac and FHA loans.


Banks will want proof that your job will continue and therefore they normally request Verification of Employment (VOE) for each borrower. Bonuses and commissions will be evaluated on a two year basis and the VOE needs to prove that the income will continue.

Any gap in employment typically needs to be explained to the lender. If you had a steady work history and then had a two month hiatus, but have been back on the job for a steady 6 months, the bank will probably accept you – assuming the new job you took is consistent with your previous work history. Lenders may also approve you if you took maternity, medical, or family leave and returned to the same employer.  One year with the same employer is considered an indication of stability, as is steady uninterrupted employment in the same line of work, or job changes that are considered a step up.

If you have less than a two year employment history, but you were attending school or you were in a program such as a retraining program before you started your current job, banks may also qualify you.

For self-employed borrowers, banks and lending agencies generally look for two years of self-employment income on your tax returns and will require your tax returns for review.


Be aware that Fannie Mae, Freddie Mac, FHA, VA, and USDA loans all have specific guidelines that must be followed. Banks follow these guidelines for the most part, but some banks have extra conditions or “overlays” that may change what they use for their approval procedure.

A licensed mortgage originator can assist you in finding the bank that best aligns with the strengths of your financial profile and is most likely to approve you for a loan. Contact Maple Tree Funding today to learn more about the mortgage approval process or for help getting started.

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Posted in Mortgage Basics & Information on Friday, February 22, 2013 by Maple Tree Funding