Your employment history is a key part of getting a home loan. You and lenders want to verify that you earn enough to afford a monthly mortgage bill, and if you're gainfully employed, you can get the green light for financing.

But what happens if your employment situation suddenly changes? If you're just considering a home purchase, this means you'll have to delay your home buying aspirations until you get back on your feet. However, if you're already in the process, there's more to think about.

You can't predict when a merger, wide-scale layoffs and other issues will affect your job security. Yet, you can know what to do if you lose your job while you're in the process of closing on a home loan.

Should you tell your lender?

If you're confident and determined, you may be able to get a new job within a short time, but this doesn't mean you should try to continue the financing process without telling your lender you're unemployed. Mortgage providers verify your employment more than once before you become a homeowner. The first check occurs at the beginning of the process, and the next instance is typically right before you close.

Not only could you lose your financing when the lender finds out you haven't been honest, but you could also be looking at federal charges for committing mortgage fraud. When you sign your mortgage application, you state the information contained therein is accurate to your knowledge and may pen a clause saying you will notify the lender if any details change.

Don't risk your financing and freedom because you're afraid.

What are your options?

You have some choices if you continue to seek financing. Here are two routes you can take:

  • You get a new job: If you can land a new position after notifying your lender, the process may continue on without a hitch pending you can provide confirmation of the job offer. However, if the position is dissimilar from your previous one - in regard to field, salary and other factors - the mortgage provider may decide to recalculate how much financing you can receive. There's also a chance the lender will delay the process until you've been at the new job for some time. If you already made an offer, there's a chance the seller will consider other buyers rather than waiting for your financing to come through.
  • You add a cosigner: If you applied for the loan by yourself, you may be able to make up for your lost income by getting a friend or family member to cosign the loan. Again, the amount of financing you ultimately receive could be different. Before adding a cosigner, you must consider the likelihood that you'll find another job soon, as your friend or relative is on the hook for your mortgage bills if you can't afford them.

Should you continue to seek financing?

Keep in mind that the ultimate outcome is based on situational factors. The probability of your plans changing is dependent on whether you have an easy-going lender. Furthermore, the situation surrounding your job loss could be a factor. If, for example, your company is going out of business but you will be kept on the payroll for two more months, your mortgage provider may be more willing to continue on with your current financing offer.

Before you decide to push forward with your mortgage, think about whether you have the money to support your bills for a few months if you can't find a job soon. Also, don't forget to factor in what you'll pay for the down payment, property inspection, closing costs and other expenses related to the home purchase.