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May 6, 2010 12:31 PM

Buying a house before starting a new job?

Will it be possible for me to apply for a mortgage before I start a new job? I'm currently in the midst of graduating from graduate school and getting ready to start a professional position with a university in a new town. In this town there are some places where it would be more affordable for me to buy rather than rent. But will anyone loan me money if I am looking to take out the loan before I start the job? If I present the paperwork that shows my job offer from the university, start date, and salary, will I be able to be considered for a loan on that basis, or will the lender only be able to look at my current (almost non-existent) graduate salary? My credit score is good and I have only student loan debt. This would be my first house purchase.

posted by MsMolly to Work & Money (11 answers total)

Back in 1989 I bought a house and took out a mortgage based on a job offer letter from a local corporation. It was fine and easy - that one piece of paper was all I needed.
posted by richg at 12:35 PM on May 6, 2010

We are doing just this, (I'm graduating next weekend starting a tenure track job across the country). Since 2007 new rules are in place to make this really difficult, unfortunately. Even with my signed contract I couldn't get a mortgage from a traditional lender. I ended up with a portfolio loan (the mortgage stays in-house at a single local bank) at a rate of 6% and 10% down, and even with almost perfect credit and my salary outlined on the contract they barely gave me that. We were told by at least 3 lenders that a pay stub must be presented within 30 days of closing to get anything better. It's of course worth it to ask around, but I expect you'll get the same answer I did (post back if you don't). If you do, be sure to ask about the 30 days thing, and ask your realtor about portfolio loans from a local bank.

As it is, I plan to refinance at a better rate (if it's still low) in a year when I get the $8k from the IRS.
posted by monkeymadness at 12:43 PM on May 6, 2010

Banks deal with this sort of thing all the time. An offer letter showing your salary with confirmation that you've actually accepted the offer--they'll probably want to call your employer--should be plenty.
posted by valkyryn at 12:44 PM on May 6, 2010

I did this very thing last year. Bought a house before moving cross country for an TT academic position. Even during a time when banks were shying away from high-risk loans, there was not much problem getting approved for a mortgage the Summer beofre my employ started. I just had to get certified letters from the school and provide my first pay stub as soon as it arrived.
posted by reverend cuttle at 12:52 PM on May 6, 2010

To follow up on monkeymadness' post. We closed in late July, and my first pay stub arrived at the end of September (I think).
posted by reverend cuttle at 12:53 PM on May 6, 2010

We got approved for our mortgage on the basis of a job offer (although in fact we didn't buy the house until after the job had started). If you do have any trouble, you may have an easier time with a local bank rather than a big national bank, where they still do at least some of their underwriting by hand and have more flexibility (and can call the actual bank president).
posted by Eyebrows McGee at 12:58 PM on May 6, 2010

If you are moving to a new town, you may actually want to rent for 6 months just to figure out where you'd really enjoy living. Perhaps even a sublet for a few months. That'll give you the time to get a mortgage with full employment history.
posted by qwip at 1:06 PM on May 6, 2010

Wow, reverend. I wonder if it's related to location. I'm going from grad-student fellowship (better than a TA but not much) to a real-life salary, and no amount of documentation from the school is good enough. We've asked around. We're moving to Maine. Again, a local bank is taking care of us, but we're not getting the low-5% rates that are all the rage right now. The big problem is 10% down, which will empty our coffers completely.
posted by monkeymadness at 1:17 PM on May 6, 2010

I just want to agree with qwip. When we moved to start an academic job, we rented for a year. I am really glad we did, because if we had bought a house right when we moved, we would have ended up in an area that now we realize is not ideal for us. Renting gave us time to learn the city. Plus, it also gave us time to save up for a down payment.
posted by bove at 1:34 PM on May 6, 2010

Try to work with a local banker or broker who is familiar with university appointments. My mortgage almost fell through when the underwriter balked at my 10-month pay schedule (and I'm tenured -- it's not like job security is an issue). Thankfully the mortgage pro at the local bank knew how to deal with this. Yay, happy ending! And I'm sure college-town bankers deal with situations like yours all the time. I'd deal with them in preference to a big national broker that has one-size-fits-all standards.
posted by philokalia at 3:34 PM on May 6, 2010

Response by poster: Great advice, y'all. Thanks. I still don't know whether it's something I'll actually do or not, but at least I know it might be possible if I work with a local bank.
posted by MsMolly at 6:25 PM on May 8, 2010