In income verification, when is it necessary to assess the borrower's employment length?

Assessing a borrower's employment length is particularly important when it is less than one year because lenders often use this criterion to gauge the stability and reliability of the borrower's income. A shorter employment duration may indicate a lack of job stability or income continuity, which can pose a risk for the lender in terms of repayment capacity.

When a borrower has been employed for less than a year, financial institutions typically scrutinize the sources and consistency of their income more closely. This additional assessment helps the lender determine whether the borrower can sustain mortgage payments over the long term. A longer employment history usually provides evidence of job stability, whereas recent employment could signify potential risk, prompting further investigation into the borrower's overall financial circumstances.

Having this context in mind helps to underline why employment length is also not as critical for part-time borrowers or in instances of applying for a second mortgage unless their primary income has changed significantly. Substantial project income alone does not provide a complete picture of overall financial reliability without considering employment length.