I'm starting to house hunt for my first home with my wife, we both have great credit, solid income and at least 10% downpayment saved up. However i recently was offered a position with a 20% raise at a new company. If i take the job how will this affect mortgage rates when i go to buy a house?

  • 2
    Is the new job in the same general industry that your current job is in? Is the majority of your income in the form of a fixed salary or do you have commissions & bonuses? If you want to use commission and bonus income, you may need 6 months of history (or so) at the new job to show that it is steady and lenders prefer to see a history in the same general line of business for a few years. – Justin Cave Oct 29 '18 at 23:11

For the majority of banks (in the US), it will have no effect at all. (Banks that do manual underwriting may have their own custom rules.)

The rate you receive for a mortgage is based only on your credit score, and your credit score is independent of your income. (If you have zero income and still manage to pay all of your bills on time while maintaining a low utilization your credit will not suffer. Similarly, if you have a very high income but accidentally make some late payments, your credit score will still suffer.)

The amount of mortgage that you are approved for is based on your income in conjunction with the rate you will get, so the only affect getting a raise will have is an increase in the amount the bank is willing to lend to you.

  • To be more technically correct I would say "your ability to pay back the loan", while most banks use credit scores some still do manually underwriting which does not require a credit score. – Pete B. Oct 30 '18 at 10:48
  • 1
    @PeteB. - fair enough. I added a disclaimer about manual underwriting. However, even then, "the ability to pay back the loan" seems more like income, whereas rate would be more determined by "the willingness to pay back the loan" combined with their history of doing so. – TTT Oct 30 '18 at 16:13

There's no way to be sure. Each bank will underwrite differently, and each bank will have different targets as far as risk categories because they have different risk categories more or less well represented in their current portfolio (plus the many mortgage lenders who don't keep a portfolio and just pass on the mortgage to a third party). My lender is always willing to test out different scenarios, as they have a computer program that gives the rate given various parameters - underwriters still do their thing but the program usually is accurate.

You say you and your wife have great credit; great. If yours is better, it's possible your income could be enough to take the mortgage yourself without her credit on it. Your debt to income ratio does matter; it may not directly go into your interest rate, but it puts you in a particular risk bucket and that can give you slightly different rates -it did for one of mine. My credit was slightly better than my wife's, so we had to test whether it was better having a joint mortgage or only with my income - it was not clear which. The underwriters gave us two different rates based on that.

Most likely changing jobs won't hurt, but it may make it slightly more complicated to get the necessary information to prove your income history.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.