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Can You Get a Home Loan on Maternity Leave?

By Emma Diehl · May 18, 2022 · 5 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Can You Get a Home Loan on Maternity Leave?

Yes, it’s possible. Say you got pre-approved for a mortgage and now you’ve started maternity leave. Your lender will verify your “temporary leave income,” if any, your regular income, and your agreed-upon date of return.

While you focus on honing your mad parenting skills, the lender cares only about your income, assets, and liabilities — as at any other time. Anyone on a standard temporary leave is considered employed, whether the absence is paid or unpaid.

A lender may approve the mortgage if your employer verifies in writing that you will return to your previous position or a similar one after your maternity leave.

Buying a House While Pregnant

Hey, why not take on two of the biggest life stressors at once? Sometimes it just happens this way, with parents preparing for a baby and a new home and mortgage.

If the move can’t be avoided because of a job relocation or other circumstances, it may be important to find a home before baby arrives. However, if it can wait, it may lead to less stress overall during the pregnancy. Plus, the added pressure of a deadline may lead to hasty decision-making that buyers could regret.

Saving for a down payment could interfere with goals like saving for a child’s college tuition.

And unless an employer is covering moving expenses, add that sizable cost to all the rest.

However, there are benefits to buying a house while pregnant, as the relocation could lead to a better school district or area to raise a child.

Ultimately, the decision to buy a house while pregnant is personal.

What Is the FMLA?

The Family and Medical Leave Act gives eligible employees job protection and up to 12 weeks of unpaid leave a year in the event of:

•   Childbirth

•   Adoption or foster child care

•   Care for a spouse, child, or parent with a serious health condition

•   A personal serious health condition

•   Qualifying exigencies arising from covered active duty or “call to covered active duty status”

The FMLA guarantees that the employee can return to their job or an equivalent one and that they’ll receive health care benefits during their leave.

Employees are eligible if they work for a company that has 50 or more staffers and have completed at least 1,250 hours of work in the previous year.

In addition to the FMLA’s 12 unpaid weeks off, more and more states are enacting paid family leave laws. And your employer may cover your pregnancy, childbirth, and recovery thanks to short-term disability insurance. Your benefit would be a percentage of your normal earnings.

Recommended: How Much Does it Cost to Adopt a Child?

How Maternity Leave Impacts a Mortgage

Before diving into the nuances of maternity leave and its impact on qualifying for a mortgage, let’s take a refresher on the home buying process.

Mortgage approval from a lender primarily hinges on two factors:

•   Creditworthiness. How likely is the borrower to pay back the loan, based on their credit history?

•   Ability to pay. Does the borrower generate enough income, and have a certain debt-to-income ratio, to make the monthly mortgage payments?

The lender may contact an employer to verify a borrower’s employment status and income.

Why could getting loans for pregnant mothers prove a challenge? Income.

As long as the lender can verify that the borrower is employed — and remember, someone on temporary leave is considered employed — and generates enough income to cover the mortgage, that could be enough. Expectant borrowers aren’t legally required to disclose their pregnancy to a lender. However, the employer can tell the lender about impending maternity leave when they call to verify employment status.

If a borrower is going on unpaid leave, they may need to disclose it to the lender. That’s because the period without pay may qualify as a financial hardship, which a borrower is required to inform a lender of.

But the lender can’t assume the mother-to-be won’t return to work after maternity leave. Lenders consider that the mother will return to work after maternity leave and continue bringing home paychecks.

Before approval, the lender will ask the borrower for written notice of her intent to return to work, and may ask for an expected return date. The lender may request a tax slip from the last calendar year if the borrower is a salaried employee.

The lender will also consider the timing of the first payment.

According to Fannie Mae and the Department of Housing and Urban Development, if the borrower will have returned to work when the first mortgage payment is due, the lender can consider regular income in qualifying for the mortgage.

If the borrower will return to work after the first mortgage payment due date, the lender must use the borrower’s temporary leave income (if any) or regular employment income, whichever is less, and then may add available liquid financial reserves.

Recommended: First-Time Homebuyers Guide

Should I Buy a Home While on Maternity Leave?

For those who qualify for a mortgage while on maternity leave, the question is, “Should I buy a house while on maternity leave?” not “Can I buy a house while on maternity leave?”

As mentioned, moving can be an incredibly stressful process, pregnancy or no pregnancy. And even if you made a budget for a baby, life has a way of throwing in surprises.

Homeownership can also come with financial surprises. In one survey, 77% of homeowners reported paying for an unexpected repair within the first year.

Having a child and buying a home both require saving some significant cash. By budgeting, doing the two simultaneously is possible.

Does it make more sense, though, to apply for a mortgage before even conceiving a child or to have a baby and apply after you and your partner have gone back to work? Only you can answer that.

Not taking the double plunge could give you time to review what you need to buy a house.

Home Loans With SoFi

Buying a house while pregnant sounds charming and … laborious. Pregnancy is not a legal limiting factor in a mortgage lender’s eyes, but getting a home loan while on maternity leave will depend on your income, savings, work return date, and credit history.

Whether you’re on a temporary leave or not, take a look at home loans with SoFi. SoFi offers a range of fixed-rate mortgages with as little as 3% down for qualified first-time homebuyers.

Find your rate in minutes, with no obligation.

FAQ

Does being on maternity leave affect getting a mortgage?

It can, but only in the sense that maternity leave can affect a homebuyer’s reported income. If buyers anticipate an unpaid maternity leave, they may need a sizable savings account.

Should you buy a home on maternity leave?

Buying a home while on maternity leave depends on your family’s needs and finances. But moving can be stressful, and adding infant care can be a lot to handle.

Who does FMLA cover?

The Family and Medical Leave Act provides 12 weeks of unpaid, job-protected leave per year for eligible employees in the case of the birth or adoption of a child or placement of a foster child, and for other reasons.

The employee must have worked for the employer for at least 12 months, have at least 1,250 hours of service in the 12 months before taking the leave, and work at a location where the employer has at least 50 workers within 75 miles of the employee’s worksite.

Then there’s the Federal Fair Housing Act, which prohibits discrimination in a residential real estate lending transaction if an applicant is pregnant or on maternity leave.

A mortgage lender cannot delay closing a loan until the woman returns to work. Temporary leave still means “employed.”

A lender is not permitted to ask whether you are pregnant. If you’re not on temporary leave, the lender cannot ask if you intend to take leave.


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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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