Lenders want to see a 2 year employment history. It can include school & employment. Sounds like you just went back to work, and yes sorry, this will hamper your ability to get a loan.

Oh no! 2 years!!??! That's a very long time....yikes.

So, they wouldn't consider his long employment history in that? Or does it not count now that he is no longer employed... we have excellent credit, no debt, etc, etc, so everything else is *prime*....
Is there anything we can do?

Sorry, you can not count his since he is no longer employed.

How long have you been back working? Is it in a professional career? Is there a local bank that you have a banking relationship with? Can you put down a substantial downpayment?

A lender may consider your loan after you have been back to work in a professional salaried (not sales/commissions) position after a years time, with a large downpayment and explanation of your circumstances.

Caroline,
I would also offer that in the current market (many of them, regionally,) you may be able to find a WONDERFUL home owned by a "trapped seller" who could happily lease/option to you so that you could then refinance (initial finance) after 12 months, "same as though you had owned it on title yourself," through conforming programs.

Our firm is helping a LOT of people do this all over the country because;
A) Many buyers (like yourselves) have found that programs they used to qualify for are no longer being ofered,
and
B) Many sellers are trapped-owners, as they've discovered that the buyers have disappeared (frequently due to exactly the same reason, above.)

Good luck!
Dave Donhoff
Strategic Equity & Mortgage Planner

Yeah, we have the down payment & everything. It is professional & on a 'track' but I've only been at it a month or so! Oh boy. Thanks for all the info.......

What about self-employed people? (he think's that's what he'll be...). Anyway, they can't prove a 'consistent' income yet they buy houses... Why is that?
There seems to be some way around this...

There used to be a lot of Stated Income loans around. But even then, self-employed borrowers were required to have a 2 year history being self-employed. A CPA had to verify that.

And when you use self-employed income on a full document loan, you use an average of their 2 years self-employed income off their tax returns to qualify them for a loan because their income is not consistent.

The only "way around this" is to find a seller who would hold a mortgage for you.

Hi Caroline- my wife and I moved to Colorado 3 yrs ago, also excellent credit, no debt, etc. I'd been self employed for about 6 yrs at that time, and obviously my wife didn't have 2 yrs of employment in CO- in fact she was still looking for a job when we bought this house for $235k (it was about 8 mo's after living in CO). We bought the house w/ a no-doc loan, only 10% down that we borrowed from a friend, 5/1 interest only though- 1st: 1,050. 2nd: @$250. We had to do interest only because we weren't sure about getting our careers going. We found an excellent mort broker, didn't hide anything with her and could have gotten a more expensive house if we wanted too. But that was almost 3 yrs ago when it was easier to buy. You've GOT to find a great mort. broker who is willing to do what it takes for you, and do a no-doc loan so you dont have to show ANYTHING to the bank. Of course you pay a little more for no-doc but without employment history that's pretty much your only choice (my Mom did the same thing here).
Now we're moving out of boring CO. in the spring, hopefully get what we need for this house, and going to expensive Orange County, CA where we'll be renting again for who knows how long until we're able to buy there- but we'll be at the beach! Good luck- it's all about the mortgage broker !!

Thankfully, those types of loans are no longer available. Here's some information why in a discussion on Fraud:

"Income, the largest category at 25%, includes both income and employment misrepresentations. For the past few years, "stated-income" loans, along with "no income no asset" loans became an addiction for lenders and investors who became satisfied with an AVM and a neighborhood flip analysis as their only fraud detection tools. During the past year, dramatic market changes exposed this myopic approach creating a strong demand for income/employment verification tools. Recent studies indicate that as much as 70% of stated-income loans contain falsified income or employment causing them to be nicknamed "liar loans." In many circles NINA loans are now referred to as NINJA loans (no income no job). There are currently three income ranges, one payroll register income and several IRS tax income verification tools. Intelligent fraud platforms rap rules and scoring around these data reports and can actually set up intelligent cascades to maximize the effectiveness and efficiency of the overall income verification process. There are at least three employment verification databases that can identify such things as self-employment, nonexistent businesses, hidden liens and bankruptcies.

When I got my mortgage through Wells Fargo they really made be jump through hoops. I had been with my employer for 7 years. I had to provide several months of pay stubs, tax returns (2 years, I think), bank statements, copies of all my investment account statements (and verification that the balance was fully vested) and copies of my credit card statements. They also asked for information on my student loans. The only debt I had at the time was normal credit card debt (balance paid off that month or the next month) and student loans (no crazy high balances).

Because it was a construction loan, I had to do this TWICE.

I believe they wanted one year with the same employer.

Pam,

From the front lines, NINJA (no employment history or seasoning required to be verified) has never been controversial or questionnable. The degree of leverage they had offered got silly at one point (to 100%,) but they have virtually always been available at limited levels.

Even today a borrower (such as our OP) could potentially qualify for no-employment-verified real estate financing as high as 70% (maybe more, but I haven't searched in a week or so, and the guidelines in the wild are changing rapidly.)

If our OP doesn't have the 30% cash down plus closing costs at this point, however, then seller-financing and/or lease/option strategies are likely the best bet.

Cheers,
Dave Donhoff
Strategic Equity & Mortgage Planner

Hmmmm, perhaps not 30% (not in my area anyway!) but definately 20 or potentially 25%. Why not make the borrower buy a "point" or have a slightly higher rate than exclude them altogether if employment is less than 2 years or whatever the qualifier is.... sheesh.

Dave - not sure what "front lines" you are refering to ... maybe from the sales perspective .. from a risk perspective NINJA (Liar Loans) were/are contoversial.

Caroline - 1 point or a slightly higher rate won't nearly cover the cost if the loan has to be foreclosed upon because you lost your position you've only had for a short period of time.

And someone that is just self-emplyed has no history of being able to earn a living being self-employed. What if they are not disciplined enough to be able to actually earn money working for themselves? We should lend large amounts of money and hope they can?

Pam,

Dave - not sure what "front lines" you are refering to ...

The production end of the business... those of us structuring finances directly with clients.

maybe from the sales perspective .. from a risk perspective NINJA (Liar Loans) were/are contoversial.

You are confusing "NINJA" loans (with which there can be no income or employment lies, no fraud,) with "Stated income" loans (with which underwriting demands an applicant claim an income number even though no verifying documentation is required.)

I am unaware of anyone experienced in the mortgage industry (longer than the most recent 8 year orgy) who finds any controversy with strict equity-based lending, which by definition ignores the applicant's income and source and relies strictly on the collateral asset value.

The degrees of leverage allowed on strict equity-based programs ("NINJA," if you will) got quite exuberent the last 3 years or so, to say the least... and THAT was certainly a topic of controversy... but the underlying lending principals are as old as mortgages themselves.

Strict equity-based lending will outsurvive all other permutations, guaranteed.

Cheers,
Dave Donhoff
Strategic Equity & Mortgage Planner

I'm not saying self-employed = no income or no discipline. I'm saying there are plenty of people who ARE self-employed with regular income (though not consistent). Are they just screwed?
For that matter ANYONE can lose their position after ANY amount of time. Seems like this logic is somewhat flawed if that's all there is to it!

Caroline,
Self employed under 1 year can get up to 70% LTV.
Over 1 year, but under 2 years can get from 80-90% LTV.
Over 2 years can get 100% LTV.

No screwage there ;~)
Dave Donhoff
Strategic Equity & Mortgage Planner

Caroline,
The first time I bought a house the bank wouldn't count my husband's income at all because he was self-employed for under two years. It worked out, because using just my income, our income was low enough that we qualified for a special low interest state program.

You're right that anyone can get fired at any time. That's a risk the mortgage companies have to deal with. But if you've been employed for a longer time, it's at least a sign that you & your company are satisfied with each other. Their risk is less that way. When I got a loan with a local bank, they didn't just want pay stubs. They called HR here and asked them if they were going to keep me on.