Landing a new job isn't always your ticket to home loan approval. In fact, if your new job is contingent on making it through a probationary period, don't be surprised if your mortgage isn't approved. Even though your pay stubs show that you can afford the payments, most lenders prefer the "wait-and-see" approach and will put off mortgage approval until after you've completed probation. This can delay the home purchase process.
Most probationary periods last 3 to 6 months - a long time to wait. From your point of view, the lender's refusal to help probably seems unfair. After all, you're working long hours and overtime so you can afford your new home.
That's why you need to look at the situation from the lender's point of view. They're in business to make money, not lose it. The way lenders see it, even one bad loan is too many. When one loan goes bad, it can easily erase all the profit earned from multiple good loans. This is one of the major challenges of obtaining a home loan while on probation.
Lenders realize that a probation clause in an employment contract means an employer can terminate you any time during the probationary period. If that happens, it's possible you wouldn't be able to make your mortgage payments. Since the possibility of termination exists, some credit assessors would rather turn down your mortgage application.
If you're trying to obtain the lowest mortgage rates while on employment probation, the best thing to do is shop around until you find lenders that don't view probationary periods as deal-busters. Non-bank lenders and lenders that offer non-conforming mortgages are two options worth investigating. These sources usually offer competitive rates and a variety of loan types including fixed rate mortgages, basic loans, professional packages, and credit lines that can be used for new homes, investment homes, home refinancing, and construction purposes.
To facilitate your search, consider partnering with a mortgage broker who specializes in helping employees on probation obtain financing.
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