It's widely known that a steady income significantly increases your chances of getting approved for a loan. Lenders perform rigorous checks, including your financial situation. So, if you're between jobs right now and aiming to buy a house, you might wonder, “Can I get a mortgage without a job?” The good news is: It's possible, but you'll need to meet specific lender requirements to make it work.
In this article, we'll explore how to get a mortgage loan without a job and the steps you can take to improve your chances.
So, can you get a mortgage without a job?
The short answer is yes, but it's not always easy. Traditional lenders want to see a stable income to ensure you'll be able to make your mortgage payments. However, if you can prove that you have other sources of income or assets that can cover the mortgage payments, you might still qualify.
How to get a mortgage without a job
How can you get a mortgage loan without a job? Here are some things you can do to improve your chances of being approved:
1. Have a co-signer
If you're wondering, “Can I buy a house with no job, but a co-signer?” the answer is yes. Having a co-signer—typically a family member or close friend—who shares the responsibility of the loan with you can bring you closer to your financial goals.
The co-signer's income and credit history are taken into account by the lender, reducing their risk and increasing your chances of approval.
“This can be a viable option if you have strong future earning potential but lack current income,” says Andreis Bergeron, Head of Brokerage Operations at Awning.com.
However, you’ll still be responsible to your co-signer: “If you fail to make payments, the co-signer is legally obligated to do so,” Bergeron says. “It's crucial to consider the implications for both parties involved, as this can put a strain on relationships if things go awry.”
2. Demonstrate other sources of income
A steady paycheck isn’t the only way to get a mortgage; lenders are open to considering other types of income that show you can make regular payments. This might include:
- Alimony
- Unemployment benefits
- Child support
- Disability benefits
- Public assistance
- Retirement benefits
- Rental income
- U.S. Department of Veterans Affairs (VA) benefits.
To make your case stronger, you’ll need to back up each income source with solid documentation. For instance, use rental agreements or bank deposits to support rental income, and provide official letters for alimony or child support.
Bonus tip: If you're self-employed or have irregular income, bank statement loans could be a great option. These loans do not rely on traditional employment verification. Instead, lenders look at your bank statements from the past 12 to 24 months to see how you're doing financially.
3. Take advantage of cash reserves
Having cash reserves can help ease lenders' concerns about your inconsistent income. This might include money saved for retirement, an inheritance, or any funds in savings or investment accounts. These reserves show that you can afford the mortgage even without a steady paycheck.
If you're looking to get a mortgage with no job but a large deposit, a substantial down payment can be particularly beneficial. A larger down payment—your upfront payment on the home—lowers the loan-to-value (LTV) ratio, which compares the loan amount to the property's value.
A lower LTV ratio means the lender is financing a smaller portion of the property's value. This usually results in better loan terms and increases your chances of approval.
4. Leverage assets as collateral
Using tangible or liquid assets like real estate, stocks, or certificates of deposit (CDs) as collateral can be a smart way to get a loan if you don’t have traditional income documentation.
Lenders will look at the value of these assets to see if they could cover your loan payments if you can’t make them yourself. Just remember, if you default on the loan, the lender has the right to take the collateral to recover their losses.
5. Rely on investment revenue
Using income from investments to qualify for a loan can also be a viable strategy if you don't have a traditional job. Lenders can look at different types of investment income, like dividends, interest, and capital gains, when deciding whether to approve your mortgage.
They typically check for a solid track record of consistent returns to make sure this income is reliable. However, it's worth noting that relying only on investment income can be risky because market ups and downs might affect your earnings and your ability to make mortgage payments.
So, while investment income can help you qualify, it’s smart to have a steady and diverse income source to cover any potential fluctuations.
6. Secure a job offer letter
A job offer letter can also help make up for not having current income. Lenders see it as a sign of future earnings and will look at things like the job title, salary, and start date to check your financial stability. This letter gives lenders confidence that you'll soon have the income to cover your mortgage payments.
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7. Get a no-income-verification mortgage
No-income-verification mortgages, or stated income loans, offer a flexible option for those who can’t provide traditional income documentation. Instead of requiring proof of income, these loans consider other factors like your credit score, asset value, and down payment size.
While they provide an alternative path to homeownership, they often come with higher interest rates and more rigorous approval processes. Borrowers must usually need to show strong credit and sufficient assets to qualify.
It's crucial to understand your financial situation and future plans to decide if this type of mortgage suits you. Weigh all factors carefully, and consult with a financial advisor if you’re unsure whether a no income verification mortgage is right for you.
Essential documents for your mortgage application
Here's a list of the documents you'll likely need for a successful mortgage application:
- Tax returns: Lenders request your tax returns to get a clearer picture of your financial situation. They typically want to see one to two years' worth of returns to confirm your income is stable and consistent with other earnings reports.
- Pay stubs, W-2s, or other proof of income: Lenders use these to calculate your monthly income and verify that your declared earnings are accurate. They might also ask for documentation of additional income sources, like rental income or spousal support.
- Bank statements and other assets: Lenders review your bank statements to assess your financial reserves and ensure you have enough savings to cover a few months of mortgage payments if needed. They also verify the source of your down payment to make sure it has been in your account long enough.
- Credit reports: Lenders assess your credit history to understand your borrowing habits and ability to repay debts. Different loan types have various credit score requirements, which can impact your mortgage options.
- Gift letters: If you're receiving financial help from family or friends for your down payment, a gift letter will likely be needed. This document confirms that the money is a gift, not a loan, and includes details like the donor's name, relationship with you, and a statement that repayment is not expected.
- Photo ID: A photo ID, such as a driver's license, is essential for verifying your identity. This step ensures that you are who you claim to be during the application process.
- Renting history: If you don’t have an extensive credit history, a renting history can show your ability to make regular payments. Lenders might request evidence of timely rent payments to gauge your reliability in managing housing costs.
FAQs
If you're married, can you get a mortgage if only one of you works?
Yes, it's possible to get a mortgage if only one person in the household is employed, as long as the “employed individual has sufficient income to cover the mortgage payments,” Bergeron says.
“Lenders will focus on the debt-to-income ratio (DTI) of the working spouse,” she says. “A lower DTI indicates a higher likelihood of loan approval. So, a couple where one partner earns a substantial income might qualify even if the other partner isn’t employed.”
Can you get a mortgage with no job, but a large deposit?
Yes. “Having a large deposit can significantly improve your chances of getting a mortgage even without a job,” Bergeron says. “A sizable down payment reduces the lender’s risk, which might make them more willing to approve a loan under less traditional circumstances.”
Can I buy a house with no job but good credit?
“Good credit is a strong asset, but without income, obtaining a mortgage is challenging," explains Bergeron. “Lenders typically need to see that you have the means to repay the loan.” However, certain situations, such as possessing significant assets or receiving income from investments, may make it feasible.
“For example, a retired individual with no job but strong credit and substantial retirement savings might still qualify for a mortgage,” Bergeron continues. “The lender will want to see that there’s enough liquidity to cover mortgage payments, even in the absence of traditional income.”
How can you manage relocating and buying a house without a job?
Relocating and purchasing a home without a job is difficult, but not impossible, as Bergeron points out. “If you have a job offer in hand, some lenders might consider this sufficient proof of future income,” she says. “It’s also possible to secure a mortgage if you’re transitioning between jobs in the same industry, particularly if there’s a clear and documented path to resuming work at similar or higher income levels.”
Can I get a mortgage with 50% down and no job?
A 50% down payment means you are paying half of the home's price up front. “This strategy significantly reduces the lender’s risk, making it more feasible to get a mortgage without a job," Bergeron says. "With such a substantial down payment, some lenders might approve your mortgage application based on the strength of your assets, savings, or alternative income sources.”