It is possible to get a home loan while on maternity leave. The process may involve your lender verifying your “temporary leave income,” if any; your regular income; and your agreed-upon date of return. Anyone on a standard temporary leave is considered employed, whether the absence is paid or unpaid.
Read on to learn more about buying a home while pregnant and how this will impact your ability to get a mortgage.
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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.
First, consider if you can wait a bit to buy a home. 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.
And unless an employer is covering moving expenses, add that sizable cost to all the rest.
But if the move can’t be avoided because of a job relocation or other circumstances, it may be important to find a home before the baby arrives. Which does have a silver lining: Saving for a down payment could interfere with goals like saving for a child’s college tuition.
Another possible benefit to buying a house while pregnant is that 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.
💡 Quick Tip: Want the comforts of home and to feel comfortable with your home loan? SoFi has a simple online application and a team dedicated to closing your loan on time. No surprise SoFi has been named a Top Online Lender in 2024 by LendingTree/Newsweek.
What Is the FMLA?
The Family and Medical Leave Act, or FMLA, 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. Currently, 13 states plus the District of Columbia have made this mandatory. 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, here’s a quick refresher course 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 women prove a challenge? Income. Consider these points:
• 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.
• 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 mortgage lender may request a tax slip from the last calendar year if the borrower is a salaried employee.
• 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. The lender will also consider the timing of the first payment.
• 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.
• VA loans don’t count temporary leave income towards qualifying for a mortgage, however.
💡 Quick Tip: Want the comforts of home and to feel comfortable with your home loan? SoFi has a simple online application and a team dedicated to closing your loan on time. No surprise SoFi has been named a Top Online Lender in 2024 by LendingTree/Newsweek.
Should I Buy a Home While on Maternity Leave?
For those who qualify for a mortgage while on maternity leave, the question may be, “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. The majority 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. So it’s your call. Not taking the double plunge could give you time to review what you need to buy a house.
Recommended: First-Time Homebuyers Guide
Home Loans With SoFi
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, it can be worthwhile to take a look at your home loan options.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
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.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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