Get money-saving tips in your inbox.

Stay on top of personal finance tips from our money experts!

News & Resources

How long should you be at your job before applying for a mortgage?

March 25, 2024
4 mins
Portrait of smiling pretty young business woman in glasses sitting on workplace.jpg

This article has been updated from a previous version.

Starting a new job is an exciting time for professional growth. But if you’re also planning on applying for a mortgage around the same time, your new job status could affect your application.

When it comes to mortgages, lenders are serious about verifying proof of income and employment history — in fact, they’ll often require the borrower to provide a certain number of pay stubs and bank statements — so if you’ve just started at a new company, made a career change, or took the leap into self-employment, you might be concerned that this could work against you.

Here’s what you need to know.

There’s no hard and fast rule for preferred length of employment — just be honest with your lender

Applying for a mortgage while you’re still in the probationary period of a new job isn’t inherently a problem for lenders, says Gary Bovair, senior mortgage underwriter at Swivel Mortgage Group. However, it’s important for borrowers to proactively disclose this information.

“Lenders don’t categorically say no, they just need to know,” says Bovair, adding that he asks clients whether they’re still in a probationary period if they’ve been in their new job for under six months.

And while the above is true, mortgage lenders generally like to see two years of job history with the same employer, adds Joe Bladek, a senior mortgage broker at Lend At Ease, a brokerage based in Concord, Ontario. This gives them an indication of your commitment to your employer and tenure in your position or industry.

That said, if you recently switched jobs and have fewer than two years of experience with your current company, there are other factors that can lend credibility to your mortgage application, including the nature of your new position.

Related: How Canadian mortgage brokers work and ways they can save you money

The type of job you have matters to your mortgage application

If your position is a step up on the career ladder — in terms of pay, title, or even company — lenders look quite favourably on that, Bladek says, regardless of how long you’ve been at the job.

“Lenders like to see clients moving up,” he says. “If we can demonstrate it’s an upgraded position in the same industry, then all of a sudden, the client seems less of a risk.”

But what about if you’re a recent graduate and your new job happens to be your first out of university or college?

Bladek says you may be able to use previous internships or co-op placements in your industry as proof of employment. However, most lenders will probably require you to have a co-signer or co-borrower with a stable job and established credit history, such as a family member, unless you’re making a substantial down payment.

If your employment history doesn't meet the lender's minimum requirements, the mortgage rate you're offered and the down payment requirement could be higher. If this is the case, you can either add a co-signer or decide to go with an alternative or private lender — however, a private lender might also give you a higher interest rate.

Otherwise, the lender will need to see an employment letter, including your start date, position, and pay details — such as whether you’re salaried or hourly and if you receive any commissions. They’ll also look for at least two recent pay stubs, which demonstrate your income stability and year-to-date income.

Related: How much mortgage can the median household income afford in these cities?

How self-employment or a career change affects a mortgage application

Not everyone works for a company. In fact, more than 2.6 million Canadians are self-employed and in February 2024, there were approximately 38,000 more self-employed workers compared to the previous month.

A recent jump into self-employment isn’t necessarily a red flag for lenders, Bladek says, but that type of employment “isn’t something that fits within most lenders’ policies.”

Because of that, you’ll likely be asked for two years' worth of income tax returns, including forms like your T1 and notices of assessment.

You’ll also need to show bank statements from the past six to 12 months, and possibly a business licence or articles of incorporation, depending on the type of business you have.

“Lenders at that point just want to see a client can then take on a stable income,” he says. “[They’ll] look at an average income over the two-year period instead of your most recent income.”

Making a career change into a new industry is not always seen as a concern, either. But Bovair says borrowers should clearly address this with the lender, especially if their goal is to pursue better opportunities or increased pay in the future.

He also strongly cautions against making a job change while in the process of your mortgage application. If you’re changing to a better title or pay, that likely won't affect things, but if you’re moving to self-employment or a significant reduction in hours or compensation, you could risk have your application denied (this could be for your own good, too – if you have a slower time getting off the ground, the last thing you want is a mortgage you can’t afford).

Read more: 10 mortgage financing hiccups and how to avoid them

Factors besides employment that can help you get approved for a mortgage

A good credit score will always bolster your application even if your employment status gives your lender some pause, says Bladek. Also, demonstrating a few months’ worth of emergency savings can prop up borrowers who might otherwise need a co-signer.

He also adds that if you’re applying for a mortgage with a partner who has more stable employment, is a higher earner, or has better credit than you, it may make sense to make them the primary applicant for the mortgage.

Employment and income history are important to mortgage lenders, but it's not the be-all or end-all of your application. Whatever the circumstances of your job switch, being upfront is always the best policy.

Read next: The hidden costs of buying a home

mortgages mascot.png

Compare Mortgage Rates

Engaging a mortgage broker before renewing can help you make a better decision. Mortgage brokers are an excellent source of information for deals specific to your area, contract terms, and their services require no out-of-pocket fees if you are well qualified.

Here at RATESDOTCA, we compare rates from the best Canadian mortgage brokers, major banks and dozens of smaller competitors.

Kelsey Rolfe

Kelsey Rolfe is a freelance journalist and editor based in Toronto. Her work has appeared in the Globe and Mail, Toronto Star, Maisonneuve Magazine and TVO, among others. She's generally pretty good at budgeting and saving, but can't seem to stop impulse buying books.

Latest mortgage articles

Should you ask your retired parents to co-sign your mortgage?
Parents can help their adult children break into the housing market by co-signing a mortgage. But there are risks to consider.
3 mins read
Then and now: How much more expensive is it to buy a home in 2024 vs. 1994?
The average home in Canada now is 133% more expensive than it was in 1994, despite income being only modestly higher. Find out why.
5 mins read
Bank of Canada cuts rate for the first time in four years: The policy rate is now 4.75%
After 11 months at 5%, the Bank of Canada has finally started cutting their policy rate, marking a turn for the Canadian economy.
5 mins read

Subscribe to our newsletter

Stay on top of our latest offers, relevant news and tips!

Thanks for joining!

You'll be hearing from us shortly - stay tuned.