A:Generally, you can get a mortgage on some types of benefits even if you do not have a source of employment. There are various types of benefits you might receive such as social security, pension, veteran affairs (VA) and unemployment. Lenders commonly want to see at least a three year continuance of this type of income to ensure you will have an income source to pay your mortgage payment and other bills.
Below we have outlined some of the documentation requirements that may be requested by your lender so that you can get a mortgage on benefits. These requirements are used by many lenders. However, keep in mind that each lender typically has their own guidelines that they follow.
- Social Security: Social Security Administrator’s (SSA) award letter, document current receipt of the social security income, and document a three year continuance of this income.
- VA Benefits: Supply a letter or distribution form from the VA showing the benefit amount. Provide proof the VA benefit will continue for at least three years.
- Pension: Provide IRS 1099 form, signed income tax returns, or a letter from the entity providing the income to document the pension income. Document current receipt and supply proof the pension will continue for a minimum of three years.
- Unemployment Benefits: Provide proof of receipt of this benefit for the prior two years by supplying the tax returns. The unemployment benefit must be associated with seasonal employment reflected on the tax returns. Document that the seasonal unemployment will continue.
- Disability Income: Supply the disability benefits statement or disability policy outlining the payment frequency, payments, termination or modification date (if applicable), and eligibility of disability.
The acceptability of benefits will ultimately be up to your lender. Keep in mind that while one lender may not allow a certain benefit to qualify for a mortgage, another may deem it acceptable. A loan officer or mortgage broker will be able to guide you on the appropriate documentation to supply once you are ready to obtain a mortgage.
Income or benefits are only one source that the lender uses for qualification. They will also commonly look at your credit, appraisal, assets, and other pertinent documentation to the loan. While your benefits may be acceptable, separate issues may cause your loan to be ineligible for approval such as your past use of credit or the appraisal. The lender will typically review your complete financial profile to minimize their risk.