The Veridian Blog

Q: I have an offer on the table for another, higher paying job.  Should I accept it now, or wait until close of escrow before changing positions?

A: The general rule of thumb is that if the close of escrow date is at least 30 days away, and the borrower is moving from a salaried position to another salaried position in the same industry, then there should not be a problem in qualifying with the same or better income.  So you should be okay.  In situations where one or more of those factors are not present, however, then you will probably have problems qualifying.  The central issue is employment stability.  Underwriters look at how long borrowers have been at their current job, how similar the position (title) and industry are, the location of the new job, and whether income is staying the same or increasing.  Any decrease in income, or a demotion, or a move to a different industry will certainly raise red flags.  Also, if a borrower is moving to a self-employed, hourly or contracting position, they will not be able to use the earned income because a 2-year history would be required.  This is true even if the position is the same, or even within the same company!  Guidelines regarding employment used to be more lenient in regard to self-employment income, but nowadays, the 2-year rule is pretty strict.

As such, it is critical that your new position be salaried.  By close of escrow, most lenders simply require a copy of the first paystub for loan approval, although we are starting to see that guideline expand to paystubs to cover the first 30 days.  If the borrower can be flexible, it may sometimes be easier (and less stressful) to postpone the new employment until after close of escrow.