Your mortgage approval hinges on stable income, and lenders check employment not once but twice: at application and again within days of closing. Understanding this timeline helps you avoid last-minute surprises that can postpone or cancel your closing.
Initial verification of employment (VOE)
When you apply, the underwriter orders a written VOE or calls your employer's HR department directly. They confirm your job title, start date, employment status (full-time, part-time, contractor), base salary, and any commissions or bonuses. For self-employed borrowers, lenders pull two years of personal and business tax returns plus recent profit-and-loss statements. W-2 employees typically provide two recent pay stubs and two years of W-2s. This initial check establishes your income baseline and calculates your debt-to-income ratio—most conforming loans require 43 percent or below, though some programs allow 50 percent with compensating factors.
Verbal re-verification before closing
Three to five business days before your scheduled closing, the lender makes a second employment check—usually a quick phone call to HR or payroll. They confirm you're still employed, still at the same title and pay, and haven't given notice. This step catches any changes that happened between application and closing. If you switched jobs, took unpaid leave, or moved from salary to commission-only, the lender learns about it here. Even a title change within the same company can trigger additional documentation requests, especially if your pay structure or hours changed.
Red flags that delay or stop closing
Several employment changes raise immediate underwriting concerns:
- · **Job change**: Starting a new job—even at higher pay—often requires a 30-day pay-stub history and a new VOE. Probationary periods can disqualify you until you're off probation.
- · **Reduced hours**: Dropping from full-time to part-time cuts your qualifying income and may push your debt ratios above the threshold.
- · **Gaps in employment**: Any unpaid gap longer than 30 days requires a written explanation and proof of re-employment stability.
- · **Commission or bonus changes**: Lenders average variable income over two years. A sudden shift from salary to commission restarts that two-year clock.
- · **Notice given**: If you've resigned or been terminated, most lenders will not close the loan.
Why you must disclose changes immediately
Mortgage applications require you to report material changes in employment, income, debts, or assets. Failing to disclose a job change is loan fraud—grounds for immediate denial and potential legal consequences. If your situation changes after application, contact your loan officer the same day. They can assess whether the change is workable, what new documentation you'll need, and whether closing must be postponed. Transparency gives your team time to adjust; silence guarantees a problem at the closing table.
The Alliance take
Employment stability is non-negotiable in mortgage underwriting. If you're planning a job change, wait until after closing or expect delays and additional hurdles. Document everything, respond to requests promptly, and keep your loan officer informed in real time. That's how you reach the closing table without surprises. Ready to start? Begin your application and we'll guide you through each verification step.