Applying for a Home Loan: Here’s What You Need to Know About Employee Requirements

When you want to apply for a home loan, one of the things that you need to know is that lenders check your employment status. The only circumstance where employment is not going to matter is when you are retired, and you don’t have to be a part of the workforce. 

Why is employment status that important? Well, if you were the lender, wouldn’t you want to make sure that the person borrowing from you is capable of repaying the loan? The only way a borrower can do that is if they have a stable source of income. 

If you are considering applying for a mortgage, here’s everything you need to know about the employment requirements you need to meet:

Employment Requirements for Mortgage Application

You Need to Have a Minimum of Two Years of Steady Employment

The first thing that a lender would want to see is that you have been working for at least two years, preferably in the same company. This is somewhat flexible, though. For instance, they might look over employment gaps if you have been with your current company for more than six months and you were with your previous employer for longer. If you have recently graduated with a university degree and you are now working in your field, some lenders might still consider you. 

It’s Okay to Switch Jobs

While two years of steady employment looks the best on paper, it’s fine if your record shows that you have switched jobs as long as it’s not for too many times and that you last in each company for not too short a period. 

Your Work History Needs to Show Consistency of Your Career Track

What story does your work history tell? Are you someone who has a clear career path or not? Lenders prefer borrowers who show that they have been in the same industry, even if they’re doing different roles (especially if they’ve been promoted). You could also work in different companies and industries but hold the same position. For instance, it would be okay if you have worked for three companies in the past few years as a human resources manager. The problem is if you have been jumping from one company to another in different industries with job roles that are not similar to each other at all. That doesn’t reflect that you are reliable enough to repay your mortgage in the future.

A Decrease in Hours or Pay May Be a Hindrance

If you have been demoted and your salary decreased, or your work hours have been recently reduced, this might be a red flag when you apply for a mortgage. However, since the pandemic, this has been a common occurrence. So lenders have become more lenient about this. As long as you have a pretty solid career track that you can prove, you might be given an exception. The best thing you can do is explain to the lender about your particular situation. 

A Job Offer Might Not Be Enough to Get Approved

Lenders look for signed employment contracts and payslips as proof of employment. Very few lenders would consider a job offer letter. To be on the safe side, don’t make any assumptions. Wait until you have had a couple of years of employment record or at least six months in the same company before you try to apply. 


Before you start looking for lenders that offer the best mortgage rates and way before you start looking for a home, you want to make sure that you are preparing everything that is needed to get approved for a home loan. That includes meeting all the employment requirements. This should not be hard if you have a good employment history. Just remember to have all the documents ready, so there won’t be any problems when you submit your application. 

If you think you are ready to apply for a home loan, paloRATE is here to help you out. We will provide you with the best loan solutions at competitive rates. Contact us today to find out more!