Covid-19 has negatively affected many industries and markets. However, the housing market has stayed strong as many people continue buying and selling their homes. Many people and their employers have discovered the sustainability of working from home. As a result, urban dwellers have begun looking to the suburbs, which offer greater and safer social distance, giving the market a slight boost in some areas of the country. With that in mind, you may soon find yourself shopping for a new home too! While Covid-19 has not closed down the housing market, it has changed the traditional way of doing things. We’re here to give you some insight into the “new normal” of buying and selling a house and financing home loans and mortgages.

We wish we could say that we had good news to offer on this front, but instead, we’ll be upfront and say that financing a home has become more challenging since the entire economy has been hit. More than ever, lenders need to protect their assets and have taken steps to ensure their new loans will be repaid. Most do this with raised minimum credit scores and larger down payment requirements combined with increased income verification.

The one silver lining in this is that lenders are aware that many businesses are functioning remotely, so it may be harder to obtain and provide proof of employment in paper form. Often, they will accept a phone or video call with your employer.

Speaking of employment, with home financing, it is crucial to keep in mind that furlough pay and unemployment will not be considered income when you apply for your mortgage. Additionally, lenders will be monitoring your credit score and status of employment until you close. The self-employed will have a more challenging time proving their income since it is unsteady.

Therefore, timing is everything. If your income, employment, or credit score have taken a hit during this time, you may qualify for a lower loan amount than you were expecting and/or be required to provide a larger down payment. It may be worth waiting for your income and employment status to return to normal or at least to improve before you look to purchase a house.

If you do decide to move forward with buying a new home, before you begin house-hunting, and definitely before you list your own home and start making arrangements with short-distance movers or long-distance movers, you will want to meet with your financial institution to be sure of the loan amount for which you qualify and to learn about the best ways for financing home loans and mortgages. Your approved loan amount may be lower than you expected. Keep in mind that community banks and credit unions have been doing their best to maintain their lending practices, while large, traditional banks have started imposing tougher restrictions to protect their bottom line.

This article is the first in a series of three that Camelot has put together to share tips on buying, selling, and moving during Covid-19. Check out the next one: Choosing an Agent!