How New Job Earnings Affect Loan Approval

1.7.2025 | Category: Article

When homebuyers land a new job, they’re often eager to celebrate their success by purchasing a new home. But as real estate agents know, fluctuations in income—such as bonuses, commissions, or a shift to a higher salary—can complicate the mortgage qualification process. 

By understanding how lenders evaluate earnings from new jobs, you can guide your clients toward a smoother homebuying experience. 

Here's what you need to know to help your clients navigate homebuying after landing a new job.

1. Understanding Lender Requirements for Income  

Lenders prioritize stability when evaluating income. They want to see that a borrower can reliably afford monthly mortgage payments, and any fluctuations in earnings can raise red flags. 

Here’s how lenders typically categorize different types of income:  

• Base Salary: Fixed income from a full-time job is the gold standard for lenders. A steady salary signals consistency and predictability.  
• Bonuses: While bonuses are often welcome, lenders usually require a two-year history to count them toward qualifying income. New job bonuses may not carry much weight unless they’re guaranteed in the employment contract.  
• Commission-Based Pay: For clients earning commission, lenders also prefer a two-year track record to establish an average income. Recent transitions to commission-based roles can be problematic if a borrower doesn’t have an income history to show.  
• Variable Pay: Income that fluctuates due to tips, overtime, or incentives can be trickier to assess, as lenders will want to see an established pattern over time.  

2. New Job, New Challenges  

For clients starting a new job, lenders will evaluate whether the change supports or disrupts their financial stability. While an increase in pay is generally positive, sudden shifts in the type of income—such as moving from a salaried role to a commission-based job—can complicate the underwriting process. Help your clients prepare by setting realistic expectations about how lenders view their earnings.  

3. Prepare for Income Documentation Requirements  

When applying for a mortgage, having thorough income documentation is essential. Lenders rely on these records to verify your clients’ financial stability and ensure they can comfortably manage their monthly payments. 

• Offer Letters or Employment Contracts: These outline salary, bonuses, or commission structure, giving lenders insight into earning potential.
• Pay Stubs: Most lenders require at least 30 days of pay history to confirm consistent income.
• Tax Returns and W-2 Forms: These provide a record of previous earnings and help establish a clients’ overall financial picture.

Remind your clients to keep these documents organized and readily available. The more information they can provide, the smoother the underwriting process will be.  

4. The Role of Bonuses and Commission  

Bonuses and commission-based income can be a double-edged sword. While these earnings boost a client’s overall income, they’re less predictable than a steady salary. Explain to your clients that lenders typically average these variable earnings over a two-year period to account for potential fluctuations.  

If your client’s new role includes bonuses or commission, encourage them to save documentation of these payments as they’re received. If possible, they might consider waiting until they’ve established a track record of consistent variable income before applying for a mortgage.  

5. What About Promotions and Raises?  

Promotions and salary increases are often viewed favorably by lenders, as they indicate career advancement. However, clients should understand that a raise might not immediately translate into higher loan approval amounts. Lenders typically want to see the new pay reflected in pay stubs, which could delay their ability to qualify for a higher loan.  

For clients expecting a raise, suggest they consult with their lender early to determine how the timing of the salary adjustment might impact their approval.  

6. Help Clients Manage Income Fluctuations  

For clients earning bonuses, commissions, or other variable income, budgeting becomes especially important. Advise them to base their homebuying budget on their guaranteed income (such as base salary) rather than total earnings. This conservative approach can help them qualify for a loan while maintaining financial stability.  

Additionally, encourage clients to boost their savings. A larger down payment or cash reserves can make their application more appealing to lenders, particularly if their income includes variable components.  

7. Timing Matters  

The timing of a job change can significantly impact a client’s loan application. For example, clients starting a new commission-based or variable-pay job might face delays in qualifying until they establish an income history. Help your clients weigh the benefits of waiting to apply for a mortgage until their income stabilizes versus moving forward immediately.  

If your clients need guidance, connect them with a mortgage professional who can provide tailored advice based on their specific circumstances.  

8. Working With Trusted Partners  

As a real estate agent, partnering with experienced lenders can help you support clients navigating income changes. Lenders at Mutual of Omaha Mortgage, for example, specialize in working with borrowers in transitional situations, offering solutions such as alternative income verification programs or tailored advice on structuring their application.  

By building a network of trusted mortgage professionals, you’ll provide clients with the resources they need to secure financing, even with fluctuating earnings.  

9. Set Expectations Early  

Finally, managing your clients’ expectations is key. Explain how their new job and income structure might impact their loan approval process, and emphasize the importance of patience and preparation. With your guidance, they can avoid surprises and feel more confident as they work toward their homeownership goals.  

Income fluctuations from a new job—whether due to bonuses, commissions, or salary increases—can present unique challenges for mortgage qualification. By helping your clients understand how lenders evaluate their earnings and prepare accordingly, you’ll set them up for success. 

Whether they’re transitioning to a higher-paying role or navigating variable income, your expertise ensures that their homebuying journey stays on track. With your support and guidance from lenders like Mutual of Omaha Mortgage, your clients can move confidently toward the keys to their new home.