If you’re currently unemployed, you may wonder whether now is the time to buy a house. Just because you don’t have a job or work for an employer doesn’t mean you can’t get a mortgage! As long as you have the financial ability to meet the house payments, you should be able to secure a mortgage. You’ll have to take some time to prove income and cash reserves or get a co-signer, but then you could be good to go.
Getting A Mortgage Without A Job
If you have no income, no savings, and no one who could be a co-signer, it can be challenging to get a mortgage. But there are far more options than you’d think that can count as income or savings, and more friends or family members than you’d expect who might be willing to co-sign. Below, we’ll discuss the options in detail. Even if you think you don’t have enough money, you may be able to find an option that works for you.
Other Sources of Income
While you may not have a traditional employment contract, there are many other sources of income that can be counted to qualify you for a mortgage. Think of anything that brings you regular income - from freelance work to rental income, and consider that as a demonstration of other sources of income.
The best sources of income are regular payments, such as:
- Retirement income
- Income from rental properties
- Investment Income
- Divided payments
- Child support payments
- Alimony payments
In addition to these, if you can demonstrate regular income from side hustles or freelance work for a year or more, that can be considered supporting evidence of income.
Savings
In the case of individuals with significant savings or inheritance, cash reserves alone can be enough to qualify for a home loan. If you’ve built up significant retirement savings outside of Social Security, these savings can help you qualify for a mortgage. The same is true for people who inherit a significant amount of funds and want to purchase a home.
While the individual may technically not have a job, the cash reserves in the form of savings can be enough to qualify for a loan.
Asking a Co-Signer
If you don’t have a large savings account or enough regular sources of income, you may need to ask a friend or family member to be a co-signer on the mortgage. In some cases, even freelancers will need a co-signer, as banks view freelance work as variable, non-guaranteed income.
A co-signer agrees to take financial responsibility for your mortgage if you are not able to make the payments. Ideally, this situation will never come up, and they’re doing you a favor to help you secure a mortgage. The co-signer will need to be willing to vouch for you. By co-signing, they assure the bank that you will be a reliable borrower while using their sufficient income and credit as additional assurance.
Housing Counselors
Housing counselors are professionals approved by the Department of Housing and Urban Development (HUD) to help evaluate your individual financial situation. They may be able to find additional ways to qualify for a mortgage or pay off your home loan.
Housing counselors are government-trained and certified and work to make a plan for you at minimal costs. They can help improve your chances of getting a home mortgage. They will also create a plan to meet your mortgage obligations.
Housing counselors usually work to help lower-income families secure housing or purchase a first home, but they can provide valuable advice for individuals of all income levels.
A Job-Offer Letter
If you’re temporarily unemployed while changing jobs, you may be able to use a new job offer letter to qualify for a mortgage. Whether you’re relocating or are simply taking a better professional opportunity, many lenders will accept job-offer letters as proof of future income. There can be restrictions based on the lender, so check with your bank to see if this will work for you.
Home Loan Options for People Without a Job
If you don’t have a job, there are still mortgages specifically designed to help you. These specialized home loans can help whether you’re out of work short-term or have been unemployed for some time.
No Income Verification Mortgage
No income verification mortgages are a good option for people with irregular income or who are self-employed. These mortgages are also called non qualifying mortgages. While you don’t need to present income verification, they usually come with higher interest rates and additional terms and conditions.
Not all mortgage lenders have a non-qualifying mortgage option. But if you’ve exhausted options to get a traditional mortgage, a no income verification mortgage can be a good possibility.
Asset Depletion Mortgage
An asset depletion mortgage allows you to leverage assets, rather than income, to qualify for a home loan. With an asset depletion mortgage, the lender looks at your liquid assets as an additional source of income. These assets need to be more than sufficient to pay for the mortgage, along with estimated daily living expenses.
If your assets from savings and checking accounts, money market accounts, retirement accounts, and investment accounts reach enough to some sufficient income, you may qualify for an asset depletion mortgage. Lenders will usually calculate your monthly “income” as 70% of the value of stocks and bonds, 60% of retirement funds, and 100% of cash accounts. In some cases, you may also qualify for a traditional mortgage.
If you take an asset depletion mortgage, it doesn’t mean you have to cash in your investment and retirement accounts. It is just used to demonstrate sufficient available funds.
Refinance Options People Without a Job
If you currently don’t have a job and want to refinance your existing mortgage, some options are cost-effective. The good news is that your payment history on your existing mortgage should help qualify you for a refinance option. The best refinance options for people without a job who don’t want to get a co-signer are a FHA streamline mortgage or a VA streamline refinance.
Here’s how they work:
- FHA Streamline
If you have an existing FHA loan, you may be able to use an FHA streamline refinance option to get a lower interest rate and lower monthly payments.
To be eligible, you may be able to use a simplified process that doesn’t even ask you to verify your income. Instead, you’ll be asked to meet a minimum of qualifying factors for a simpler, faster approval process.
- VA Streamline Refinance
A VA streamline refinance is available for veterans and servicemembers who want to refinance their existing VA loan to get a lower interest rate. The VA streamline refinance is backed by the federal government and is a way for qualifying individuals to lower their monthly payments or to get more favorable payment terms.
Final Thoughts on How to Get a Mortgage Without a Job
It’s possible to get a mortgage without a job, even if you’ve been unemployed for a long time. The key is to highlight existing streams of income and if you don’t have enough qualifying options, to ask a co-signer to help. Whether you have a job or not, lenders require that you meet certain requirements to obtain a mortgage. However, not having full-time employment shouldn’t be an obstacle to buying your first home or a new property.