Being unemployed and not having a full-time job can hurt your chances of getting approved for a mortgage. That’s because two major deciding factors for lenders when reviewing a mortgage application are your income and job history.
Unfortunately, not everyone has those. Some individuals don’t have full-time jobs because they work for themselves as freelancers or small business owners. Others are between jobs or just received a job offer, so when they apply for a loan, they don’t have a job yet.
Can you get a mortgage without a job? Ultimately, yes, but it’s much harder to do. Most loans have job history and income requirements, but lenders may approve your loan if you can prove your ability to repay it another way. You can get a mortgage loan without a job, but you’ll need to satisfy your lender’s requirements. Remember, a job is only one source of income, so just because you don’t have one doesn’t mean you can’t repay your mortgage loan.
This article will discuss everything you need to know about how to get a mortgage loan without a job, potential challenges, and the types of home loans best suited for your particular situation.
Getting a house loan without having a job may seem impossible, but it is doable with the right financial preparations and loan products. As a home loan advisor myself, I’ve helped many clients successfully purchase homes even when unemployed.
The key is demonstrating to lenders that you have sufficient assets or other income streams to reliably make monthly mortgage payments. While it can be more challenging, homeownership can still be within reach.
What Lenders Look For
When reviewing mortgage applications lenders want to see
-
Stable income – Usually from employment, but other sources work too. Needs to be enough to cover the monthly mortgage payment and other debts.
-
Good credit – Credit scores of at least 620, but 720+ ideal. Proves you can responsibly manage debts.
-
Down payment funds – At least 3% down required typically. 20% down provides the best rates/terms.
-
Low debt-to-income ratio – Your total monthly debt payments, including the new mortgage, should be under 50% of gross monthly income.
Meeting all the above criteria proves to lenders you are a low risk for defaulting on the mortgage.
Qualifying Without a Job
If you don’t have a job, you’ll need to demonstrate sufficient assets and alternative income sources to qualify. Some options include:
-
Using savings – Large cash reserves may satisfy lenders if assets are 2-3x the loan amount. Funds must be documented.
-
Investment & business income – Dividends, rental income, etc can count if steady for 2+ years. Tax returns required as proof.
-
Retirement/pension income – Social Security, 401k/IRA withdrawals, pension payments. Just verify you will keep receiving it for 3-5+ years.
-
Alimony & child support – Court-ordered payments work but need consistency for 3+ years and proper documentation.
-
Other – Disability, trust funds, unemployment can sometimes qualify too with enough history.
-
Co-signers – A co-signer with sufficient income/assets/credit can help you meet requirements you can’t alone.
The more reserves and income sources you have, the better. Lenders want to see you can pay the mortgage even if one income stream ends.
Loan Options
You’ll typically need a higher down payment and solid credit to get approved without income. Government-backed loans can offer more flexible requirements. Some options to look into:
-
Conventional loans – Usually require 10-20% down without income. Interest rates higher than with income.
-
FHA loans – Only 3.5% down payment required. Credit scores as low as 580 accepted.
-
VA loans – No down payment needed if you’re a veteran or active military. Minimum credit of 620.
-
USDA loans – 100% financing available in rural areas for low/moderate income buyers. Credit 640+ required.
Government programs come with mortgage insurance premiums you’ll pay monthly but enable lower down payments than conventional loans.
ARMs may help get lower rates initially and qualify with less income, but the tradeoff is payments rise over time once the intro rates expire.
Asset depletion mortgage programs offered by some lenders specifically help buyers tap into their assets instead of income to qualify.
Refinancing Without Income
If you already have a mortgage but lost your job, you may still be able to refinance for a lower rate or better terms without current income in these cases:
-
You have plenty of home equity built up
-
Substantial reserves are available
-
Co-signer can help you qualify
-
You qualify for a government streamline program
FHA and VA streamlines let you refinance existing FHA/VA loans with limited documentation, credit requirements, and often no appraisal needed. Reduced costs help too.
For conventional loans, you’ll likely need excellent credit, low loan-to-value ratio, and 6 months’ reserves minimum to have your best refinance chances without income. Or find a co-signer.
The bottom line – getting approved for a home loan without stable employment is tougher but absolutely possible. The keys are leveraging your assets strategically and exploring the right mortgage programs. If owning a home is your dream, be sure to get guidance from a loan officer on the best plan for your unique situation. With a little creativity, we can find a way to make it happen!
Tap Into Cash Reserves
Some people don’t work because they don’t have to. For example, retirees no longer work and still earn enough income from their retirement and investment accounts to purchase a home, while others have high net worth and don’t have to get a full-time job. Whatever the case, you can tap into your cash reserves to secure financing for a home.
Lenders prefer that you have a consistent and reliable income, but lack of employment or a regular employment status doesn’t mean that you can’t afford your mortgage. Instead, you may have significant amounts of money in assets that allow you to make larger down payments and pay for the loan on a monthly basis.
You can get a mortgage with no job but a large deposit if it makes financial sense for you. If you have a good credit history, lenders may be willing to look past your unemployment if you have cash reserves that will help you pay for the loan. Unfortunately, if you have a bad credit history, lenders will be less willing to accept your loan application with or without a job. There are many home loans for bad credit, but not having a job drastically reduces your chances of securing one.
A larger down payment can reduce your interest rate and gives you a small loan balance, making your monthly payments more manageable. In addition, lenders may be more willing to approve your loan if you have enough savings to pay your mortgage for at least a few months.
Showing your lender that you can put down a higher down payment and pay for the mortgage through your savings is best for individuals who are either between jobs, waiting to start a new job, or self-employed because it means that you’re either working or will soon be working. However, retirees can also use cash reserves to demonstrate their ability to repay the loan by showing investment and retirement account balances.
How to Get a Mortgage Without a Job
You can get a home without a job, but not having a job makes it more challenging to secure financing for your home because lenders must ensure that you have a reliable income. Unfortunately, strict underwriting processes prevent many qualified borrowers from getting approved for a loan because they don’t have typical income. If you don’t have a job, you may still have income, but lenders will consider you a higher risk than other borrowers. Here are a few ways to improve your chances of getting a mortgage without a job:
One of the easiest ways to get a mortgage without a job is to use a co-signer who is a parent or spouse. These individuals should be employed or have a high net worth to prove their ability to repay the mortgage loan if, for some reason, the primary borrower can’t. A co-signer reduces risk for the lender because they’ll be responsible for paying the loan. Additionally, finding a co-signer with a full-time job, a high credit score, and large savings can increase your loan amount because it adds security for the lender.
It’s important to note that a co-signer is different from a co-borrower. A co-borrower has more responsibility and becomes an owner with you because their name is on the loan, so they’re expected to make payments. Co-borrowers are usually couples, spouses, or friends who decide to purchase a home together. Having a co-borrower can drastically improve your chances of getting approved for a mortgage if you’re unemployed.
Choosing between a co-borrower and co-signer depends on the nature of your relationship and how involved the second person wants to be. For example, if you plan on living together and are both responsible for paying the mortgage, you can be co-borrowers. However, if the person doesn’t plan on living in the home, they’ll be a co-signer. Co-signers are typically individuals with a close relationship with the borrower, such as a parent or immediate family member.
There are risks to both options for co-borrowers and co-signers. For example, if you have a co-signer and don’t pay your mortgage, they’ll be responsible for it. Otherwise, it could affect their credit. Similarly, if you have a co-borrower and one of you doesn’t pay, the other one will be on the hook for the mortgage payments.
Co-signers and co-borrowers can help you secure a mortgage without a job because they reduce the lender’s risk. In either case, lenders will consider your and your co-signer or co-borrower’s income and credit score, making you a much more appealing applicant.
There is one caveat. In many cases, your co-signer or co-borrower should improve your chances of getting approved. However, having a co-signer with a lower credit score or income than yours can have the opposite outcome, so it’s crucial to choose this second party wisely.
Working a 9-5 job isn’t the only way people earn an income. Any money you make is considered income, whether it’s from investments or alimony payments. Lenders consider all of your income to determine your eligibility for a home loan. However, it’s important to note that they prefer that you have some type of job, whether you’re self-employed, a freelancer, or a part-time employee, to ensure that you’ll continue to have a reliable income for the life of your loan.
That said, lenders will take into consideration income from other sources, such as:
- Investment income from stocks, bonds, money market accounts, etc.
- Child support and alimony payments
- Pension payments
- Social Security payments
- Rental property revenue
- Freelancing income
- Part-time employment income
In any case, it’s crucial that you can provide documentation for your income so your lender can verify it. Luckily, there are many ways you can get income without a job or being an employee. Many people work for themselves and earn a good living. Unfortunately, even though they earn enough to repay the loan, strict lending requirements make it difficult to secure financing. Luckily, with the right lender, you’ll be able to use a variety of income sources to prove your ability to repay the loan, whether you’re retired, a freelancer, or someone with a high net worth.
Can you Get a Mortgage without having a Job?
FAQ
Can I get a mortgage if I have no income?
Can I get a mortgage on a fixed income?
Can you get a mortgage if you are retired?
Can you get a mortgage without having a job?
You can get a mortgage without having a job with Rocket Mortgage. However, you still need to meet certain eligibility requirements to secure the loan. Start the mortgage process today and get approved to buy a home.
How can I get a home loan without a job?
Here are some strategies to help you get or refinance a home loan without a job: 1. Consult A Housing Counselor. If you’re not sure where to start, a great first step is to speak with a housing expert about what you’ll need.
Can a prospective home buyer get a mortgage without a job?
Prospective home buyers can get a mortgage without having a job; lenders may consider other reliable sources of income besides a full-time job when determining mortgage eligibility.
Do you need a job to get a home loan?
Rather, what you need is income. Specifically, you need to be able to prove to a mortgage lender that you have a steady income, and that your income is high enough to cover the monthly home loan payments you’ll be on the hook for if your application is approved. But you don’t necessarily need to be holding down a job.