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A gap in employment can be a tough thing to explain, especially on a mortgage application. If you’re going to depend on a lender to help you buy a home, your employment history is one of the most scrutinized parts of your application. Any gaps in your employment history can affect your getting approved for financing. But do lenders really need to know about that time you were laid off because your former company went under? How about that period you spent out of work while you were going back to school?

According to the experts, that’s a big, fat affirmative—mortgage lenders need to have your full financial story, warts and all. Here’s why employment history matters and how to explain any gaps to your potential mortgage lender.

How detrimental is a gap in employment on a mortgage application?

Employment history on a mortgage application is something lenders look at in order to decide if you’re going to be able to make your monthly payments and eventually pay off your home loan. Stability is important to lenders, as they want to know lending you money is a low risk. After all, if you default on a mortgage, a lender is left holding the bag. Having a steady income to repay a loan is a major factor in securing a mortgage.

At a minimum, most lenders look for a two-year history of employment, and will typically ask for company names, addresses, and phone numbers, as well as your position at the company, current and past incomes, and dates of employment.

The optimal history shows consistent employment “without anything that would raise concerns,” says Todd Huettner, owner of Huettner Capital in Denver.