Can You Qualify Your Income with a Job Letter?

Whether you’re transitioning from the military to civilian life or just taking the leap into a new career, understanding how to qualify income for a home loan is crucial. And guess what? You don’t have to wait until your first day on the new job to kickstart the home-buying process.

The magic tool we often use in these situations? Job letters.

The Power of Job Letters

So, you’ve landed a new job, and you’re eager to make your homeownership dreams a reality. A job letter can provide documentation of your income for loan qualification, approval, and even closing before you officially start your new gig.

But how does it work? It sounds too good to be true!

Not at all! Here’s the breakdown of the four key components you’ll need to make it work.

1. Clearly Defined Income: The job letter must explicitly state your annual salary or hourly rate.

2. Full-Time: It should confirm that your position is full-time, and ideally at least a year long term. If the position is indefinite, even better.
3. No Contingencies: Ensure there are no hurdles like pending certifications or drug tests. The letter should affirm that you’re good to go, no strings attached.
4. Signature of Authority: A responsible party, usually HR or a manager, needs to sign off on the letter.

Closing the Deal

Closing on a home up to 60 days before starting your new job? It’s possible. With a clean job letter and the right components in place, you can utilize your new income to close on your home.

What’s the catch?

You’ll need a background of related work experience or training in the job you’ll be entering. Ideally this would be two years or more.

Timing Is Everything

Here’s the twist: closing CAN happen before your job begins, but ONCE you’ve started, you’ll need that first pay stub. To avoid potential hiccups, consider closing a bit before your start date (using your job letter) or be prepared for a slight delay while waiting for that initial pay stub.

But just remember, you don’t necessarily need to start working that new job before you can close on your home. Job letters can give you a jump start on that process!