You can buy a house without a job, but it can be extremely difficult, if not impossible, to qualify for a mortgage without verifiable income. Buying a house with cash is perhaps the best way to buy a house without a job, but not many people have the available funds to do so.
However, there are still ways to purchase a home without the typical W-2 income. And there are a number of programs and options available to facilitate homeownership for people without a traditional job or income, such as freelancers, contractors, and small business owners.
Working with an experienced real estate agent can be a great help in this situation. They’ve helped buyers with a wide range of financial situations find homes, and may even be able to recommend the right lenders to get you approved.
Can You Get a Mortgage Without a Job?
It’s not impossible to get a mortgage without a job, but it’s more difficult. Mortgage lenders want to see proof of steady income, and self-employment doesn’t always fit the bill.
If you’re self-employed or recently lost your job, you may still be able to get a mortgage through special loan programs or by working with a lender that considers alternative forms of income like investments, alimony, child support, or other regular payments.
Here are some options depending on your situation.
Seasonal Workers and Contractors
If you are a seasonal worker or contractor, lenders typically consider your average income over the past two years when determining whether or not you can qualify for a loan.
To qualify as a seasonal worker or contractor, you’ll need to show that you have a steady work history for at least the past two years. This demonstrates to the lender that you have experience in your industry and that your income is likely to continue even if your hours or contract work fluctuates.
Small Business Owners
Lenders typically want to see that your business has been profitable for at least two years before they’ll consider your business income when qualifying you for a loan.
To improve your chances of qualifying, you can provide tax returns, financial statements, and other documentation that shows your business is stable and has a good chance of remaining profitable.
Unemployment income cannot be used to purchase a home and will not qualify you for a mortgage. If you are receiving unemployment benefits and want to buy a house, you’ll need to wait until you have a job again before applying for a mortgage.
Getting a Mortgage Without Two Years Work History
Some lenders may still give you a mortgage if you’ve been working for less than two years if you can still provide proof of steady income. The best way to do this is through tax returns or pay stubs that show your earnings over time.
This is also the case if you have employment gaps in your loan application. Lenders will want to see an explanation for any gaps, as well as documentation of any income you received during that time.
When evaluating your finances, mortgage lenders also look for a good credit history, a low debt-to-income ratio, and ample cash for a down payment. With a good track record in these areas, you may still be able to qualify for a mortgage without two years of consistent work history.
|💡Debt-to-income ratio (DTI) represents the portion of a borrower’s gross monthly income that goes toward their debt payments each month. Lenders like to see a DTI of less than 36% when evaluating mortgage applications, but this varies by financial institution.|
How to Get a Mortgage Without a Job
Mortgage lenders look primarily at verifiable income when evaluating loan applications. In general, financial institutions require borrowers to have a two-year work history with stable income, though there are programs available for those who don’t meet this criteria.
If you don’t currently have a job or a typical two-year work history, here are some steps you can take to qualify a mortgage.
Strengthen Your Credit Profile
A strong credit profile will make you more attractive to lenders, even if you don’t have a long work history. To improve your score, pay down current debt, avoid new debt, and make all of your payments on time.
If you’re new to building credit, you can start by getting a credit card or taking out a small loan and making payments on time.You can also get help from a credit counseling or optimization service, such at Credit Karma orExperian.
While this may not be enough to qualify for a mortgage in the absence of a job, a strong credit profile tells lenders you’re not a risky borrower and may improve approval odds.
Get a Co-signer
Co-signers can help you qualify for a mortgage even if you don’t have a job, or if you have good credit but don’t earn enough to qualify for a mortgage on your own. A co-signer is someone who agrees to be responsible for the loan if you can’t make payments. Don’t take this option lightly though — co-signers will be on the hook for the loan if you can’t make your payments.
Work With a Non-traditional Lender
Some lenders specialize in working with unconventional borrowers. These lenders may be more willing to consider alternative forms of income, like investments or alimony, when evaluating your loan application.
Rely on Investments and Cash Reserves
Rather than a traditional mortgage, consider getting an asset-based loan that is secured by other real estate or valuable assets like a retirement account. These loans don’t necessarily require employment, but they typically come with higher interest rates.
If you have a significant amount of cash saved up, you may be able to use it as collateral for a loan. This option is typically only available if you have a large amount of cash saved, as most lenders won’t lend you more than 80% of the value of the collateral.
Await a Job Offer Letter
Many lenders accept a job offer letter as proof of income in lieu of current pay stubs. If you’re in the process of looking for a job, this may be an option to consider. Keep in mind, though, that you may need to provide additional documentation, like a copy of the signed job offer letter or a letter from your future employer detailing your expected salary and start date.
Look Into Government Programs
There are special programs for first-time homebuyers and people with low or moderate incomes. For example, the Federal Housing Administration (FHA) offers loans that only require a 3.5% down payment and have more relaxed credit and employment requirements.
The Veterans Administration (VA) offers a similar program for eligible veterans, active duty military, reservists, national guard members, and certain surviving spouses.
These government-backed programs may be more lenient when it comes to employment and income requirements because they’re designed to help people with limited resources.
Demonstrate Other Sources of Income
Even if you don’t have a job, you may still qualify for a mortgage by demonstrating other sources of income. This may include sources like a lawsuit settlement, Social Security, a life insurance policy, alimony, gift, or inheritance. Depending on the type of income, the lender may require additional documentation such as a gift letter that asserts the gift is not a loan and does not require repayment.
|🚨Mortgage lenders do not consider illegal income, projected income, capital withdrawal, income that is not included on tax returns, or other non-verifiable income when reviewing an application.|
Pay Cash for the Home
If you’re able to pay cash for the entire purchase price of the home, you won’t need a mortgage or a job to buy a house. This is the simplest way to buy a house without a job, but it’s rarely possible.
If you are able to pay cash, provide proof of funds to the seller when you make an offer on the home. This is typically in the form of a bank statement or letter from your financial institution.
If you don’t have enough to pay cash for a home, consider making a larger down payment. This approach ultimately gives you more equity in your home from the start, which can make it easier to get approved for a mortgage.
Either way, make sure you have enough cash and income left over to cover taxes, insurance, and other ongoing expenses related to home ownership.
A local real estate agent may provide a list of lenders who can help you qualify for a mortgage. An experienced lender can show you what kind of mortgage you’re likely to qualify for based on your verifiable income, and give you actionable guidance if you do not yet qualify for a loan.
FAQs About Buying A Home Without A Job
Can You Buy a House Without A Job?
You can buy a house without a job, but it can be extremely difficult, if not impossible, to qualify for a mortgage without verifiable income. Learn more about if you can buy a house without a job.
Can You Get A Mortgage Without A Job?
Mortgage lenders look primarily at verifiable income when evaluating loan applications. So, it’s difficult to get a mortgage without a traditional W-2 job, but it’s not impossible. Learn more about if you can get a mortgage without a job.
Can You Get A Mortgage Without Two Years of Work History?
In general, financial institutions require borrowers to have a two-year work history with stable income, though there are programs available for those who don’t meet this criteria. Learn more about how to prove your income without two years of work history.
Can You Buy A Home On Unemployment?
Unemployment income cannot be used to purchase a home and will not qualify you for a mortgage. Learn more about if you can buy a home on unemployment.