Can I Get A Mortgage Without A Job?

Last Updated on 06/12/2017 by GS Staff

Q:

Can I get a mortgage without a job?

A:

Having a job is not the only way of obtaining income. There are several other ways people bring in income besides employment. Mortgage lenders recognize this and consider various sources of income for mortgage qualification.

However, this does not mean a lender will approve you without a source of income. The lender needs to protect themselves from loss so they need to see that you have the ability to pay the monthly mortgage while also being able to pay your other obligations like credit card and car payments.

The lender will also want to see that the income you receive will continue going forward. For example, assume you are qualifying for a mortgage with only alimony payments that you have been receiving from your ex-spouse. Assume that these payments to you are expected to discontinue within the next year. The lender will likely have an issue with the ending alimony income since your ability to pay the mortgage is ending soon, assuming you have no other source of income.

Sources of Non-Employment Income

There are a variety of income sources that many lenders will accept that are not derived from employment. Lenders may have different requirements on how to document this income. However, below we have provided examples of the documentation that may be requested to qualify for a mortgage.

  • Child Support/Alimony – Copy of a divorce decree or separation agreement reflecting the payment to the borrower and proof of continuance for at least three years. Additionally, six month’s receipt of the income may be required.
  • VA Benefits – A copy of the letter or distribution form from the VA with documentation that the income will continue for at least three years,
  • Dividend/Interest Income – Two years of tax returns or account statements showing the receipt of the income. Additionally, the borrower must provide evidence that they will have sufficient assets remaining after the loan closes for this income to continue.
  • Social Security – Social security award letter, current receipt, and proof of three-years continuance if not of retirement age.
  • Pension – Copy of tax returns, letter from pension issuer, or 1099 showing the income is regularly received. The income must continue going forward.

Lenders will accept more than one source of income as long as it is expected to continue. Note that the non-employment income listed above is not limited to these sources. Check with a mortgage professional and they will assist you in determining what a particular lender will accept as income.

Other Factors

Remember that income is only one piece of the package to qualify for a mortgage. While you will need to prove you have a way to pay the mortgage, there are many other factors that lenders consider . They may examine a borrower’s past use of credit, the loan amount requested compared to the value of the property (a.k.a loan-to-value), and potentially the amount of reserves a borrower has in the bank or other asset accounts. When it comes to income, lenders compare the total amount of income the borrower earns and they compare it to their debts. Yes, there are additional factors that lenders examine but these are some of the main points of consideration.

Conclusion

Remember that each lender may have different guidelines that they use to qualify a borrower for a mortgage. While one lender might accept a loan with certain documentation or circumstances, another lender may not. A loan officer can potentially help you obtain a loan that you may have otherwise thought you would not be approved for with a certain lender.

It is important that you are certain that you will be able to pay your mortgage in the near future. If you know you are going to lose your job shortly after the closing of the mortgage or during the loan process, it may be wise to hold off on obtaining the mortgage until your financial situation is a bit clearer. This is especially true if you do not have another job or source of income in the works.

Talk with your mortgage professional or lender if you know your financial situation is changing.  You should always make your financial situation clear to your lender so that there are not problems down the road. Most lenders do their best to work with borrowers to try to obtain a mortgage loan approval.