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I am currently thinking about changing jobs in the midst of purchasing a new home. To further complicate matters, the new job may be a 1099 (contract) situation.

I work in the tech industry, which currently has a very strong job market. I have fantastic credit and a history of steady income (including some 1099 work in the past). My wife also works (but we could not get this loan based on her income alone).

Do lenders take all of these factors into account during the lending process? How much does a job change affect the mortgage process?

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    The lender makes a commitment based on the facts submitted. At the closing, when money is about to change hands, the lender will likely ask you to sign a piece of paper certifying that there has been no material change in the facts relied upon in the loan approval process. A job change is definitely a material change even if you are earning more in the new job. You will likely be required to submit a copy of your new contract, or a letter from your new employer stating that the job is likely to last a long time. Moral: tell your lender upfront to avoid glitches or delays at the closing.
    – Dilip Sarwate
    Jul 23, 2012 at 19:14

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Best advice is to ask your lender. That being said, if you are changing jobs, but keeping the same type of job you are usually ok and if the loan was approved before, it would still be approved.

If you switch from W-2 to 1099 or vice-versa, permanent to contract, switch industries (software dev to accountant), or make less money there is a strong risk of the loan being declined.

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I recommend you ask this question to a qualified mortgage broker. We just closed on our first house. My wife & I have had several years of stable jobs, good credit scores, and a small side business with 1040 Schedule-C income... and we were surprised by the overwhelming amount of documentation we needed for the loan. For example, we had 3 checks deposited to our bank account for $37.95. We had to provide copies of the checks, deposit slip and a letter explaining the deposit. One reason we might have had so much trouble: the mortgage broker we selected sold our loan to a very picky lender. On the plus side, we obtained a competitive rate with extremely low closing costs on a 30 year fixed mortgage. However, I can't imagine the headaches we would've incurred if one of us were changing jobs to 1099 income.

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I just closed on a refi last week Thursday. The app went to the lender mid to late May. The lender called my employer for an employment verification on the Monday before closing. I would wait till after the loan funds to change jobs.

FWIW, we signed on Thursday afternoon, escrow had to FedEx the originals to the lender on Friday, lender should have received it on Monday, we are still waiting to fund. I expect the loan to fund no later than tomorrow.

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