Getting a Home Loan in a New Job or During Probation

What lenders want to see from a new employee

Lenders must verify your income and be satisfied you can repay without hardship. With a new job the payslips prove the amount, so the open question is continuity. Policies commonly ask for three to six months in the current role, or for probation to be finished. Those are preferences, not universal rules. Many lenders waive them for permanent employees who have stayed in the same line of work.

Probation clauses worry borrowers more than most credit assessors. Almost every permanent contract has one. The lender is really asking how likely it is that you will still be employed in six months, and strong history in the same occupation answers that. The guide on how to get a home loan approved covers the rest of the assessment.

Why same industry experience matters so much

A nurse who moves between hospitals, or an accountant who changes firms, has changed employer without changing earning capacity. If the new job ended, another like it would be easy to find. Two or more years of continuous work in the same field, with no long gaps, is the pattern most policies reward.

Career changers and gaps in employment

A move into a different field removes that comfort. The lender has no evidence you will succeed in the new occupation, so it commonly wants probation completed or three to six months of payslips. A formal qualification for the new role, such as a completed degree or trade certificate, shortens the wait with some lenders.

• Short gaps between jobs, measured in weeks, rarely matter if you can explain them.
• Longer gaps for study, travel, illness or caring are usually acceptable with a brief written explanation and a stable role now.
• Several job changes in two years draw questions, though moves for higher pay in the same field read well.
• A redundancy followed by a similar role is generally treated as a normal job change.

Casual, contract and fixed term employment

Employment type matters as much as time in the job. Permanent full time and part time income is taken at face value. Casual income has no guaranteed hours, so lenders commonly want six to 12 months of history, and some accept less if you worked in the same industry before. Once you meet the tenure rule, many lenders count all of the income.

Lenders usually annualise casual income from the year to date figure on your payslip. Take a casual worker with $19,500 gross over the first 13 weeks of the financial year. That is $1,500 a week, or $78,000 over 52 weeks. Some lenders instead annualise over 46 or 48 weeks to allow for unpaid leave, which gives $69,000 or $72,000. The choice of lender alone changes your borrowing power.

• Fixed term contracts: lenders look at the time remaining, past renewals and demand for your occupation.
• Day rate and ABN contractors may be assessed as PAYG employees or as self-employed, depending on the lender and how you are paid.
• Overtime, bonuses and commission in a new role are often discounted or ignored until there is a track record, commonly six to 12 months.
• A second job usually needs its own history before it counts.

How deposit size and LMI change the answer

Your loan to value ratio (LVR) is the loan divided by the property value. At 80% or below, the lender makes the decision alone and can apply its most flexible employment policy. Above 80%, most loans need lenders mortgage insurance, and the LMI provider has its own employment rules. Those rules are often stricter on probation, casual work and short tenure.

Consider a $700,000 purchase. With a 20% deposit of $140,000 you borrow $560,000 at 80% LVR, and only the lender's policy applies. With a 10% deposit of $70,000 you borrow $630,000 at 90% LVR, and both the lender and the insurer must accept your employment. The same borrower, six weeks into a new job, can be approved in the first case and asked to wait in the second.

First home buyers using the federal 5% Deposit Scheme avoid LMI because the government guarantees part of the loan, but participating lenders still apply their own employment policy. The first home buyer loans page explains how low deposit lending works.

Documents that help a new job application

With a short history in the role, the supporting documents carry the application, so give the lender what it needs to confirm the income and judge continuity. The full checklist is in the guide to documents needed for a loan.

• Signed employment contract showing position, permanent or casual status, base salary and probation terms.
• Letter from the employer on letterhead confirming your start date, role, hours, salary and that you are not under notice.
• Your first payslips from the new role. Many lenders want two, and some accept one with the contract.
• Evidence of prior employment: previous payslips, income statements from myGov, or a resume showing two years or more in the field.
• Qualifications or registration if you have moved into a field that requires them.

Expect the lender to phone your employer to confirm the details, and possibly to check again shortly before settlement. Tell payroll or HR a call is coming. If your employment changes between approval and settlement, you are required to tell the lender.

Parental leave, and switching between self-employed and PAYG

In each case lenders lend against income they can verify and expect to continue. Where that is harder to show, a bigger deposit and a lender whose policy fits your situation close most of the gap, often without any need to wait.

Should you wait or apply now, and when to get pre-approval

Applying now makes sense if you are permanent, in the same industry and have a deposit near 20%. Waiting makes sense if you have changed careers, are casual with a short history, rely on commission, or need LMI. A declined application leaves an enquiry on your credit file, so a wrong guess has a cost. A broker can check policy before you apply, which the mortgage broker vs bank comparison discusses.

• If you have not changed jobs yet and plan to buy soon, consider settling the purchase first.
• If you have accepted a role but not started, some lenders will assess the signed contract. Most want you to have started.
• If probation ends within a few weeks, waiting for it widens your lender choice at little cost.
• Keep your savings pattern and account conduct clean while you wait. Lenders look at the last three to six months of statements.

Pre-approval commonly lasts about three months and is based on your employment at the date it was issued. Changing jobs after pre-approval means the lender must reassess, and it can withdraw the approval. The loan pre-approval guide explains what pre-approval does and does not cover.

Common mistakes with home loans in a new job

Most problems come from timing and lender choice, not from the job change itself.