How Mortgage Lenders Verify Employment (2024)

Mortgage lenders usually verify your employment by contacting your employer directly and by reviewing recent income documentation. The borrower must sign a form authorizing an employer to release employment and income information to a prospective lender. At that point, the lender typically calls the employer to obtain the necessary information.

Employers are usually happy to help, but there are steps borrowers can take if they refuse to verify employment.

Key Takeaways

  • Mortgage lenders verify employment by contacting employers directly and requesting income information and related documentation.
  • Most lenders only require verbal confirmation, but some will seek email or fax verification.
  • Lenders can verify self-employment income by obtaining tax return transcripts from the IRS.
  • There are several steps that borrowers can take if employers refuse to verify employment.

The Verification Process

In general, lenders verbally verify the information borrowers provide on the Uniform Residential Loan Application. However, they may opt to confirm the data via fax, email, or a combination of all three methods.

Mortgage lenders use this information to calculate several metrics to determine the likelihood that a borrower will repay a loan. A change in employment status can have a significant impact on the borrower's application.

Additional Information

When verifying employment, a lender will frequently ask other questions as well. The lender may inquire about the likelihood of continued employment.

Lenders are also interested in verifying position, salary, and work history. While lenders usually only verify the borrower's current employment situation, they may want to confirm previous employment details. This practice is common for borrowers who have been with their current company for less than two years.

Verification for Self-Employed Individuals

Many people who take out mortgages are self-employed. In this situation, lenders often require an Internal Revenue Service (IRS) Form 4506-T. This form is a request for "Transcript of Tax Return" and allows the lender to receive a copy of the borrower's tax returns directly from the IRS. In a self-employed situation, the lender may also ask for attestation by a certified public accountant (CPA) to confirm income.

Responding to a Refusal to Verify Employment

It is frustrating when an employer will not verify employment, but it can be easy to fix this situation in some cases. The first thing to do is tell your employer's human resources (HR) department that you need verification.

Some companies will not give out employment-related information without your permission. This policy is designed to stop sensitive information, such as your salary, from falling into the hands of criminals.

Don't give up or get angry if an employer will not verify your employment. There are usually ways to deal with this problem or work around it.

There can also be state laws or company rules against sharing particular employment-related information. Talk to your employer to determine if some general rule prevents them from sharing. If so, ask them to explain that to your prospective mortgage lender. Some lenders might be willing to process an application if they understand that another state's laws prevent them from verifying certain information.

You may also be able to find a different mortgage lender. The best mortgage lenders might be more familiar with your state's laws or willing to work with your employer's policies.

Finally, there are some cases where an employer will not verify employment for other reasons. At this point, it might be time to consider getting a new job. Why won't the employer verify your employment? Could they be doing something illegal? Does your employer have something against you? In the long run, you will likely be better off getting out of such a bad situation as soon as possible.

At What Point in the Mortgage Process Does a Lender Ask for Employment Verification?

When you apply for a mortgage, you'll typically give the lender some financial information, including your employer and income. The lender will verify this information during the underwriting process in order to approve you for a mortgage. That process happens days to weeks before closing. However, since mortgages can take a month or two to settle, the lender may perform a second verification of employment closer to the closing date, to make sure your circ*mstances haven't changed in that time.

What Happens if a Lender Cannot Verify Your Employment?

It is possible for a loan to be denied during the underwriting process, so you'll want to do everything you can to make sure that doesn't happen. If the lender can't verify your employment through the human resources department, be sure to call the department and explain your situation. You can also ask the lender whether supporting documentation, such as recent paystubs, tax returns, and W-2s, will be sufficient.

What Happens if I Lose My Job or Get a New Job When Trying To Get a Mortgage?

Tell your lender right away if you lose your job during the mortgage approval process. You have an obligation to make sure your mortgage application is true and complete, and a change in employment will be of interest to your lender. Unfortunately, losing your job may affect whether your loan moves forward, but by informing your lender, you may be able to work out an alternative plan.

The Bottom Line

Mortgage companies verify employment during the application process by contacting employers and by reviewing relevant documents, such as pay stubs and tax returns.

You can smooth the employment verification process by speaking with your HR department ahead of time to let them know to expect a call from your lender. If you're self-employed, you can have your income attested by a certified public accountant and provide IRS Form 4506-T to confirm your employment.

How Mortgage Lenders Verify Employment (2024)


How Mortgage Lenders Verify Employment? ›

Mortgage lenders verify employment

verify employment
Verification of Employment (VOE) is a process used by banks and mortgage lenders in the United States to review the employment history of a borrower, to determine the borrower's job stability and cross-reference income history with that stated on the Uniform Residential Loan Application (Form 1003). › wiki › Verification_of_employment
by contacting employers directly and requesting income information and related documentation. Most lenders only require verbal confirmation, but some will seek email or fax verification. Lenders can verify self-employment income by obtaining tax return transcripts from the IRS.

How does a mortgage lender verify employment? ›

Mortgage lenders usually verify income and employment by contacting a borrower's employer directly and reviewing recent employment and income documentation. These documents can include an employment verification letter, recent pay stubs, W-2s, or anything else to prove an employment history and confirm income.

Do mortgage lenders verify paystubs? ›

Lenders ask for the necessary documentation to ensure you qualify for a home loan, including job history, tax returns, pay stubs, and other types of proof of income. Tax returns help the lender determine your ability to repay based on information about last year's income.

Do mortgage lenders verify remote employment? ›

In most cases, yes, you will need a remote work letter when applying for a mortgage loan. The purpose of this letter is to provide verification of your employment and income during the underwriting process. Underwriters are responsible for verifying the information you provide, including your employment details.

What is a verbal verification of employment before closing? ›

Verbal verification of employment is done with current employers just before the loan is funded to ensure employment status has not changed. It is generally completed as late as possible in the loan origination process.

What questions do lenders ask when verifying employment? ›

Lenders will often ask about the future of your employment and how likely you are to lose your job. This is especially pertinent if you recently moved to a new job or industry. If you've been in your job for less than two years, you may have to give details about previous roles.

How do underwriters verify income? ›

You'll need to furnish a few documents in place ofW-2s: profit and loss statements, K-1s, balance sheets and your personal and business tax returns. Your underwriter will check that your income matches your reported income and verify your employment status with your employer.

Can banks detect fake pay stubs? ›

Advanced AI and Machine Learning algorithms can analyze pay stub data to identify inconsistencies and irregularities. They can detect discrepancies in income figures, deductions, and tax calculations that may indicate a fake pay stub.

Can banks tell fake pay stubs? ›

Can banks detect fake pay stubs? Banks have their own methods in place to verify employment and income, which can help detect fake pay stubs. They may cross-reference the information on the pay stub online with other proof of income documents or directly contact the employer.

Do mortgage lenders actually call your employer? ›

Mortgage lenders verify employment by contacting employers directly and requesting income information and related documentation. Most lenders only require verbal confirmation, but some will seek email or fax verification. Lenders can verify self-employment income by obtaining tax return transcripts from the IRS.

Do lenders check employment after closing? ›

Yes, there is. 'At closing' or 'clear to close' refers to the point where the lender takes a final look at your application. It usually happens about a month or two after your application. If there are discrepancies such as job change or lower credit card score from accumulating debt, your loan can be denied.

What happens if you lose your job after buying a house? ›

Losing your job can lead to a number of complications, including: -Losing your home - If you lose your job and cannot make your mortgage payments, the bank may foreclose on your home. This can result in big financial losses, especially if you have already taken out loans to purchase the home.

What is checked in employment verification? ›

Dates of employment, Title (job classification), and. Salary verification (only verify the salary that is given to you is correct or not correct)

What is acceptable for employment verification? ›

Employment Record

A pay stub or payment statement that shows: An issue date within 12 months prior to the date your claim was filed. Your first name (or initial) and last name. At least the last four digits of your Social Security number or your employee identification number.

What qualifies as employment verification? ›

Employment verifications confirm a candidate's previous work history, including past employers, dates of employment, and positions held. A professional reference check provides a more in-depth look at a candidate's work experience and character through interviews with previous employers or colleagues.

How close to closing do they verify employment? ›

Second Verification of Employment

Most mortgage companies will go through a second VOE about ten days before closing. Remember, you are borrowing hundreds of thousands of dollars, and your lender wants to make sure you are still earning enough to make your house payment.

Do lenders check employment after clear to close? ›

While it's rare, the short answer is yes. After your loan has been deemed “clear to close,” your lender will update your credit and check your employment status one more time.

How do underwriters verify self employment? ›

The lender may verify a self-employed borrower's employment and income by obtaining from the borrower copies of their signed federal income tax returns (both individual returns and in some cases, business returns) that were filed with the IRS for the past two years (with all applicable schedules attached).

How do lenders verify documents? ›

A proof of deposit is used by lenders to verify the financial information of a borrower. Mortgage lenders use a POD to verify there's sufficient funds to pay the down payment and closing costs for a property.


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