Getting A Mortgage On Maternity Leave

Image by GettyImages; Illustration by Jessa Lyn Lizama/Bankrate

Buying a home while on maternity leave is possible, but it might make getting a mortgage slightly more complicated. To ensure a seamless process, make sure you know your rights and understand what documentation you need to provide to your lender.

Can you get a mortgage while on maternity leave?

Yes, it is possible to get a mortgage while on maternity leave, paid or not. Lenders are prohibited from considering whether you’re pregnant or on parental leave when evaluating your application for a mortgage. 

Of course, when you apply for a mortgage, whether you’re on leave or not, a lender can and will consider your ability to repay the loan. But if your lender can verify that you will return to work in the same or a similarly-paying position after your leave, your time off work shouldn’t be an issue. And if you’re applying for a joint mortgage with a partner, their income will also be a part of the equation. 

“All lenders are required to determine … that the income they use to qualify you for the loan is stable, predictable and likely to continue,” says Casey Fleming, a Silicon Valley-based mortgage advisor and author of “The Loan Guide: How to Get the Best Possible Mortgage.” “This means as long as your employer is willing to verify in writing that you will be able to resume your previous position — or a similar one at similar or higher pay — as soon as your maternity leave is over, most lenders will approve and close the loan.”

Most lenders will want a documented return date, as well, says Fleming. Some lenders might require you to prove that you returned to work by providing at least one post-leave pay stub.

If your leave is paid, even in part, by your company or a short-term disability provider, be sure to document this income. Lenders can consider it in your mortgage application. 

What documents do you need to get a mortgage while on maternity leave?

You’ll need many documents to apply for a mortgage, and even more if you’re on maternity leave. Here’s what to have on hand:

• Bank statements and pay stubs from at least 30 days prior to taking maternity leave
• Tax returns, including W-2s, from the past two years
• Most recent investment and retirement account statements
• Most recent loan statements, such as car or student loans
• Short-term disability statements, if receiving
• Paid family leave statements, if receiving
• Statements for other sources of income, such as child or spousal support
• Your employer’s contact information for verification purposes
• A letter from your employer documenting your employment status and wages, including your anticipated return-to-work date
• A letter of explanation detailing your circumstances, with a return-to-work date that matches your employer’s documentation
• Down payment gift letter, if applicable
• Information on other real estate properties, if applicable

How to report maternity leave housing discrimination

If a mortgage lender requires some extra documentation to prove your income during maternity leave, that’s not necessarily cause for alarm. 

However, “Refusing to approve a mortgage loan or provide refinancing because a woman is pregnant or on maternity leave violates the Fair Housing Act’s prohibitions against sex and familial status discrimination,” according to the U.S. Department of Housing and Urban Development, the agency that enforces the act.

If you believe a mortgage lender is violating your rights, file a complaint with HUD. The agency will investigate your claim at no cost.

1. To file by mail, print and fill out this form, then follow the instructions to send.
2. To file by phone, call 1-800-669-9777 and speak to an intake specialist.
3. To file online, use the HUD website.

HUD has fined numerous mortgage companies for discriminating against people who were pregnant or on paternity leave, including a $5 million settlement with Wells Fargo in 2014.

Tips if you’re applying for a mortgage while on maternity leave

• Shop around. Different mortgage lenders charge different rates and fees, and some might have more experience with borrowers who have unique income circumstances.
• Work with a mortgage broker. Rather than dealing directly with a lender, consider engaging a mortgage broker who can shop for loans on your behalf. “Some lenders are more conservative than others and less flexible in lending to someone on any sort of leave,” says Fleming.
• Try to time the closing. If possible, setting the closing date before you begin — or after you return from — maternity leave can make the mortgage application process easier. 

FAQ

• Do I have to tell my lender I’m pregnant?
  

  No. You are not obligated to tell your lender if you are pregnant or planning to become pregnant when you apply for a mortgage. Your lender is also not permitted to ask whether you are expecting or trying to start a family — doing so would violate the Equal Credit Opportunity Act. If you are asked about your pregnancy status during the application process, consider responding, “Why do you ask?” or noting that the question is inappropriate.

  However, if your lender calls your employer to verify your income and employment while you’re on maternity leave, your employer is free to disclose that information.

• What if I decide I don’t want to return to work after leave?
  

  If your lender doesn’t require you to confirm that you’ve returned to work after leave, this will be primarily a personal decision. But if you suspect that you won’t want to resume your role — even if you haven’t informed your employer — this should be a factor in your homebuying budget. If you’re making the decision with a partner, ensure that you’re shopping for homes that you can afford on their income alone.

• Can I defer mortgage payments while on maternity leave?
  

  If you’re taking an unpaid leave and struggling to make mortgage payments, you may ask if your lender allows mortgage deferment, the process of adding overdue payments to the end of your mortgage term. You’ll likely need to prove financial hardship to qualify for deferment.