How can a borrower's employment type affect their mortgage eligibility?

The role of a borrower's employment type in determining mortgage eligibility is significant, particularly because lenders use employment status as a key factor when assessing credit risk. Stable employment is viewed favorably because it indicates a consistent income stream, which reassures lenders that the borrower is likely to reliably meet mortgage payment obligations.

For individuals who are self-employed, lenders typically request additional documentation, such as tax returns for the past few years, profit and loss statements, and other financial records to verify income. This is due to the perceived variability and instability associated with self-employment compared to salaried positions, where income is more predictable and consistent.

Thus, stable employment not only communicates reliability but also impacts the documentation process, leading to the conclusion that employment type significantly influences mortgage eligibility.