Can You Qualify for a Mortgage While on Probation at Your Job?
Last year, we noticed an increase in the number of mortgage applicants who are still on probation at their jobs.
In the past, we tended to advise these clients to wait until their probation was completed, because lenders view them as a higher risk of not making their mortgage payments (if released during probation). But in some cases, that may not be necessary.
We recently discussed this topic on a mortgage industry Facebook discussion board and received some feedback from seasoned experts on which circumstances new employees could still apply for a mortgage.
What brokers had to say
Here’s what a sampling of mortgage brokers had to say about the factors that would favour a mortgage application while still on work probation:
“It depends a lot on who the employer is. I have had exceptions for CN employees, cops, standard government jobs.”
– Justin Foulis, Mortgage Advantage in North Vancouver
“I’ve had success across the A-lending universe with police, EMS, fire, nursing, doctors, teachers, etc., primarily due to the work and education required to obtain the job in the first place.”
– Adrian McInerney with Oriana Financial
“If it’s the same industry and they have a two-year history, it’s usually pretty safe. More so in a high-demand industry like nursing, programming or trades…that’s usually OK. Multiple recent job changes, a new industry or no two-year income average is a hard sell.”
– Monica Parkin, Invis in Courtenay, B.C.
“Same industry, good tenure previously, and overall good file, I have never had an issue.”
– Ryan Sims with TMG The Mortgage Group in London, ON
“I always want to know that it makes sense. Same industry? Check. Better income? Check. Closer commute? Check. Not habitually changing jobs? Check. I always call an underwriter first to see that they will get behind this. But if it’s a prudent move, I have had lenders make the exception.”
– J.D. Smythe, Dominion Lending Centres Central in Mississauga, ON
“It depends on the file. Someone with weaker credit, next to no assets who have bounced around a bit…..probably not. It depends on the layers of risk.”
– Julie Malo, Paragon Mortgage Inc. in Timmins, ON
Can high-ratio purchasers qualify for a mortgage if they are on probation?
If your lender can get behind it and make the case for the applicants, there is a decent chance the insurer will go along. For example, Sagen’s website clearly states, “Applicants are to be qualified based on the lender’s probation policy.”
Mortgage maven Ron Butler from Butler Mortgage notes that the process can be fairly straightforward. “You make the case to the lender to waive probation, and in the case of a high-ratio mortgage, the lender sends it to the insurer, the insurer approves, and bingo, done,” he said. “Conventional probation is purely a lender decision, typically a risk sign-off and done. It doesn’t matter which lender, it’s the same process everywhere.”
Can a borrower change jobs prior to the funding date?
Once an applicant is approved for a mortgage, we normally advise they stay put till the mortgage is funded. No sudden moves or changes to your personal or financial circumstances, is an oft-heard broker mantra.
But some homebuyers want or need to change jobs in the middle of the purchase process. They do not want to pass up a golden career opportunity.
Even in this case, getting their mortgage approved may still be possible. It always comes down to the same things.
“I have had a 99% success rate with this situation,” noted Andrew Galea, VP of Digital Sales at MortgagePal. “As long as you can relate the previous occupation with the new job, you should be fine.”
He adds that it all comes down to risk management and the propensity for the client to be successful in the new job so they can still be employed after probation. “Where the trouble lies is when it’s a totally new industry or profession and the odds of failure increase,” he added.
Myself, I see this happening most often with Information Technology professionals and engineers. Their skill sets are very much in demand. Once they have had a few years of successful employment under their belt, it seems they can move around with impunity.
That said, it’s best to just depend on having the base salary accepted, because including an additional two-year average of commission and bonus income from a previous job is going to be much more challenging.
If a probationary period is in your picture, you need peace of mind and certainty. This is one of several factors affecting whether or not your mortgage will be approved. Ask your mortgage broker or banker to get the lender’s sign-off before you firm up your purchase plans.