Is 2 years of recent continuous employment required to get a mortgage?

Question

I graduated from college and have been employed with a major company for half a year with a sufficiently high compensation (6-digit tech job). I am trying to buy a small apartment to live in.

I had been in school for several years prior to that, getting my Bachelors.

While in school, I had occasional TA jobs and internships.

Before school I had years of employment (non-trad student).

I applied for a mortgage at DCU, got prequalified, paid application fee, and got a call from a processor saying that my application got suspended because of lack of "continuous 2 years of employment". She took the info about my older employment history (beyond their standard past 2 years) and said she will try to re-submit it back to the underwriter.

She said that I may not be able to get a mortgage, and according to her it's a "Fanny Mae requirement, we have nothing to do with that". She also said all mortgage products have the same requirement.

How accurate are her statements? I was previously told by specialist from that same credit union that education can be considered in lieu of work.

Answer 1

2 years of continuous work history isn't a hard and fast requirement. It's highly recommended, but other factors can override a lack of work history. 6 months might be a little tough to work around though. Ultimately, the bank can choose to reject any applications with less than 2 years of work history. Still, "Fannie Mae requirement" isn't quite accurate.

Education, especially for high-paying jobs like tech, can be considered in lieu of work history. So that specialist was right.

If your loan is a conforming loan, it's regulated by Fannie Mae and Freddy Mac. Nonconforming loans have looser requirements to qualify (and generally higher interest rates as a result) - they're either too large or don't meet the requirements set by Fannie and Freddy. So, the "all mortgage products" comment is wrong.

Good luck on buying your first home!

Answer 2

As has been said in an answer, the answer may vary depending on whether you want to qualify for a strictly conforming loan versus a non-conforming loan.

If you don't qualify for a conforming loan, it's worth asking around, especially if you live in an area where your situation is more common (lots of folks with higher incomes but less employment history). Banks ultimately want your business, and they're especially interested in people who are or may become higher net worth individuals.

For example, "physician mortgages" have been a thing for a long time now. These are loans that are less stringent about debt-to-income ratio and downpayments, and the whole concept is based on the fact that physicians typically see large adjustments to their income after they finish residency, fellowship, become attendings, or get other specialized training. Despite the name, these loans are also offered to other professionals such as lawyers, CPAs, veterinarians, etc. who have high future earnings potential but who may not have a lot of job history or a big down payment. There are some pitfalls with these kinds of mortgages, so make sure you do your homework.