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Employment Status

Employment Status

Story By Nadine Makos; Edited by Rose Stephens

It is important to remember that ultimately borrowers are asking for a large sum of money. Just as if a  friend/family member were to ask you to borrow money – you would want to ensure that they are able  to pay you back. Creditors want to ensure that borrowers have steady employment with consistent  paychecks to ensure that the payments can be made. A 2-year work history is often used as well as a  month of paystubs. This can be cross referenced with your W2s and tax transcripts to ensure that you  have steady employment.  


Verification is done multiple times throughout the loan process to ensure you will qualify for a loan.  First, to establish your employment history and again to ensure that you are still employed. If you  transfer jobs or paycheck amount, the lender will question it and more documentation will be required.  This could include a letter from your employer, more pay-stubs, etc. If the supporting documentation  cannot be provided, the loan could be denied. For example, we have had borrowers quit their job a  week before closing – this caused a delay in closing as the borrower had to get a letter from the new  employer regarding start date, job duties (to ensure it match previous line of work) and expected pay. 


There are different concerns for barrowers who are not working a typical 9-5 desk job – i.e., contractors,  hair dressers, self-employed bee keeper, etc. Since pay is not always consistent, a 2-year average is  typically what is used. If there are any major breaks in that time frame (school, medical) – this could  negatively affect the loan approval. You should always assume that any bonuses are not counted  towards salary because they are not consistent income.  

We help a lot of pilots, as they experience major changes in their initial pay structure to account for  training and a rapid increase in pay scale. Contracts, letters from employer, and schedules help your  loan officer work out the details with the Underwriter. 


Alternate forms of income/employment can be counted but are typically harder to prove. Investments,  retirement, crypto-currency, child support, and alimony are some of the most common examples. You  should expect to provide multiple statements, terms of withdrawal, divorce decrees, and/or more.  Always remember to provide ALL pages of the documents, including blank pages, to your loan officer.  This ensures that everything that is needed is seen by the Underwriter in a timely fashion to avoid any  issues. It’s best to be honest and upfront about any non-traditional employment/pay structure factors  and potential changes in income.