Haven't worked in 2 years for income verification, but graduated college. Do I need to wait 2 years?

[myscorerocks]

I have a 680 middle score and have always paid my monthly bills, but I haven't worked or done taxes in more than 2 years. I just graduated from college. Do I have to wait 2 years for a mortgage because of income verification? I have excellent rental history and as I mentioned, my middle mortgage score is 680, but I have high utilization. I haven't been the one paying, but will be with my new job. Thanks! I'm moving soon and would rather be paying a mortgage than rent!

[Medic981]

You probably need to start by getting caught up filing your taxes.

[CramEiko]

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@myscorerocks wrote:

I have a 680 middle score and have always paid my monthly bills, but I haven't worked or done taxes in more than 2 years. I just graduated from college. Do I have to wait 2 years for a mortgage because of income verification? I have excellent rental history and as I mentioned, my middle mortgage score is 680, but I have high utilization. I haven't been the one paying, but will be with my new job. Thanks! I'm moving soon and would rather be paying a mortgage than rent!

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In my opinion... While you are buidling an income background, look into an installment loan. Something small, say $500-$1000 from your bank of choice and or credit union. Don't spend the loan amount, use it to pay yourself back over time and use AUTO PAY.... Lenders like to see a good solid 24 month payment history. With rates going up again, its a tough call in my opinion. You may still save more money if you can build more credit and get yourself over a mid score of 740 or so. I wasn't asked once (by my lender) what my previous 3 years of rental history was..... Just saying... Good luck. Maybe has more suggestions in here...

[myscorerocks]

I have 20 years of credit, YFI, and never have missed a payment. I have currently have installment loans, a car loan, and credit cards. I haven't had an income the last 2+ years, so I haven't had to file my taxes. I have no inquiries on my files because they're older than 2 years. My middle score is 680, but that's only because of my higher utilization. While I could wait and pay down my cards before buying, the rent in my area is astronomical and I would actually be saving money by buying plus I'm missing out on equity. Plus, I could also move into a house and get roommates to pay down my balances or refi down the road. And, mortgage interest is currently tax deductible, whereas rent is not. I would normally wait to buy, but I have to move anyway, so I thought I would look at my options.

My main concern is whether I would qualify based on a new job and recent graduation. I thought it counted, but I thought I would ask here before reaching out to a mortgage rep to see how things have changed in the banking world now that no doc mortgages are a thing of the past. Thanks!

[Medic981]

As I understand it, mortgage lenders ask for two years of tax returns, two years of W-2s and pay stubs for the most recent last 30 days. Every mortgage in America sold on the secondary market is ran through automated underwriting. If you are a W2 wage earner and the automated underwriting findings do not require tax returns, you may not need to provide returns at all in order to qualify close on a home.

As you have not had a job and W2s for the last two years and have not filed tax returns for the last two years I am not sure how you will be able to start the mortgage lending process.

[myscorerocks]

Yeah, that's what I need to know now. I used to work in banking and mortgages are completely different now, which I understand and respect. But, I thought I've read how students have got mortgages once they graduated as long as they got jobs in the industry that they graduated in because it applied. I know things are loosening up, which I don't exactly want because it will lend to a repeat of 2008, but I worry it will push me back to owning for 2 years. I've helped people get into homes based on credit because we had no doc loans. Higher interest, but I could refi down the road and write on the interest. I thought I would reach out to see if people have been in my shoes. It's definitely a peculiar situation and appreciate any insight. Thanks!

[myscorerocks]

As I do more research, no doc and stated income loans that were popular and completely abused leading up to the crash of 2008, are back? Anyone done this? Very interesting and a possible solution to my issue. 

Found this article... https://www.washingtonpost.com/news/where-we-live/wp/2018/02/12/zero-down-home-loans-are-back-be-ver...

[myscorerocks]

Interesting! 

https://www.housingwire.com/articles/37220-bank-launches-new-lite-doc-mortgage-program

https://www.quonticbank.com/borrowing-solutions/lite-doc-loans

This is awesome for New Yorkers! https://www.quonticbank.com/borrowing-solutions/first-home-club

This is also really interesting, though doubtful to help someone in my position! https://www.housingwire.com/articles/37128-chase-quietly-launches-its-own-3-down-mortgage-lending-pr...

[NC_Mtg_Loaner]

As long as your new employment is within your field of study FHA considers your student history as "employment" so to speak.   Therefore, it's quite possible you would now be eligible for an FHA loan assuming you meet all other qualifications and so I'd recommend applying for a loan.

You'll need to be prepared to provide copies of  your official transcripts from school and the most recent two years income  history that's available----meaning, if you left the full time workforce in 2015 (and worked in 2014 full time) and went to school during 2016 and 2017 then you'll be able to establish the proof of continuity and stability that a lender is looking for in this case, so it's not out of the question.

Good Luck and keep us posted.

[homeloanexpert]

I concur with NC_Mtg.  I have done hundreds of loans over the years for recent college grads in the similar situations as yours. If you have a degree and we can tie it to your new job, then your years of education are viewed as work history. I recently closed a loan for a lady who was previously a stay home mom. She went to  nursing school, graduated and was hired. Mind you she had no recent work experience as she was a stay mom for years and years.

What makes the loan even stronger would be a good hire letter or contract and better yet is being placed a salary. That's seals the deal. Remember, the UW is really looking for the probability of your income continuing. Being paid an hourly rate instead of a salary can be a little trickier but certainly doable. Don't give up, you just need to find a Mortgage Pro who can guide you through the process. You will find several on this site.

Best wishes to you!