Can You Get a Home Loan Without a Job?

By Bill Lyons | Published on June 15, 2023

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.

Can You Get a Mortgage Without a Job?

Can you buy a house without a job? Unemployed individuals or those without full-time jobs may still be eligible for a mortgage loan. However, qualifying for home loans is much more challenging if you don’t have a consistent source of income from a job.

Many people have jobs, but they’re self-employed or gig workers that don’t have typical W2 jobs lenders look for when approving applications for traditional loans. Additionally, retirees are no longer working, but they still have a reliable source of income. Regardless of where your income comes from, as long as you can prove your ability to repay the loan, you can still qualify for a mortgage.

Remember, lenders prefer that borrowers have a reliable stream of income, but that doesn’t necessarily mean you need to have a full-time job or work for an employer. Instead, you can use alternative sources of income, such as small business or freelance, investment, rental, and retirement income. Additionally, some lenders will take into account supplemental income sources such as child support and alimony payments.

Unfortunately, there are downsides to getting a mortgage without a job. Since you might be viewed as a higher-risk borrower since you don’t have a full-time job, lenders can pass some of their risk onto you. Mortgage loans for individuals without jobs typically have higher interest rates because they’re riskier investments for the lender. Additionally, they may come with lower loan amounts and stricter approval requirements to ensure a borrower can repay the loan. In most cases, lenders will require a larger down payment regardless of the type of loan.

Every borrower is different, so while getting a mortgage without a job is possible, you should consider your unique financial situation to determine the right time. If you decide to continue with the mortgage process, the best way to improve your chances of getting approved for a home loan is to increase your down payment to avoid some of the possible challenges.

Unfortunately, getting a home loan is difficult for individuals without full-time jobs, even those with consistent income, because they’re self-employed. Since mortgage lenders usually use pay stubs, W2s, and tax returns, getting a loan when you’re not a regular employee can be more challenging. However, it’s still possible as long as you can prove your ability to repay the loan.

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:

Get a Co-Signer

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.

Leverage Alternative Income

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.

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.

Use Assets as Collateral

Using your assets as collateral is another way to get approved for a home loan when you don’t have a job. Lenders will review your assets to determine whether you can liquidate them when necessary to pay your monthly mortgage premium. However, many lenders have rules for the types of assets they’ll accept.

The following assets are examples of what you may be able to use as collateral:

• Real estate
• Vehicles
• Stocks
• Certificates of deposit (CDs)
• Savings accounts

If you obtain a loan using your assets, the lender often puts a lien on them until you’ve successfully paid off your mortgage. If you fail to repay your loan, the lender can seize your assets.

When you obtain a home loan, the property itself serves as collateral. However, with some loan types, such as asset-based loans, lenders use your assets as income to determine whether you qualify for the loan. For home loans, your assets show your cash flow, and lenders prefer to use only liquid assets that you can readily use to pay your monthly mortgage bills.

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Loan Types for Buying a House Without a Job

Remember, just because you don’t have a typical job doesn’t mean you’re not earning an income. As we’ve discussed, there are several types of income you can pull from to qualify for a home loan. However, individuals without jobs are limited in the types of home loans they can qualify for because of stringent lending criteria.

Traditional home loans typically require at least two years of employment history and W2 employment so lenders can verify your income with W2s, pay stubs, and tax returns. Unfortunately, there are many borrowers who don’t have standard W2 jobs, don’t get pay stubs, and reduce their taxable income by taking legal deductions on their tax returns.

While these types of borrowers may not qualify for a traditional home loan, they may still qualify for Non-QM loans with more flexible lending requirements. Some types of mortgage loans you can get without a job include the following:

Asset-Based Loan

An asset-based mortgage uses your assets as income rather than collateral. The more valuable your assets, the more money you can borrow. This type of lending is ideal for high-net-worth individuals, retirees, and small business owners that don’t have a traditional source of income but have enough in assets to pay their mortgage bills.

Asset-based lending has more flexible requirements and a more streamlined application process because the lender doesn’t have to confirm your employment history or income. Instead, they have to verify your assets’ worth. The most significant benefit of this type of home loan is that you can avoid using income and instead leverage the assets you already have to demonstrate your ability to repay the loan. The types of assets you can use for this type of loan include:

• Bank accounts
• Certificates of deposit (CDs)
• Investment accounts
• Retirement accounts
• Money market accounts

One thing all of these assets have in common is that they’re liquid. Borrowers can easily take money out to pay their mortgages. Although it is a possibility, most lenders won’t allow you to use non-liquid (illiquid) assets that have to be sold to generate cash, such as vehicles, art, collectibles, and real estate.

Bank Statement Loan

Bank statement loans are similar to asset-based loans. However, instead of using all of your assets to qualify for the loan, you’ll demonstrate your ability to repay using bank statements. With this type of loan, you have to work for your income because your bank statements must show regular deposits. However, you don’t have to have a typical job or be an employee.

Instead, you can be a self-employed individual, freelancer, gig worker, or small business owner that can prove a reliable source of income through tax returns. These types of loans are best suited for individuals that don’t get a W2 or pay stubs from an employer. Additionally, this type of loan works well for borrowers who deduct expenses on their tax returns and don’t have a taxable income that showcases how much they truly earn.

Depending on your lender, you’ll be required to provide a certain number of bank statements — usually 12 to 24 months’ worth — to prove that you have a reliable source of income and the ability to repay the loan.

Debt Service Coverage Ratio (DSCR) Loan

Debt service coverage ratio (DSCR) loans are for investors only; you can’t use them to purchase a primary residence. However, you can use them to purchase rental property to diversify or grow your portfolio. With DSCR loans, lenders consider a property’s projected cash flow and compare it to the mortgage debt to determine if the borrower can repay the loan. They don’t consider personal income. Instead, they use the debt service coverage ratio to estimate whether a borrower can use their rental property income to pay their mortgage.

These loans are typically ideal for investors who take significant deductions on their tax returns and reduce their taxable income. In this case, it’s not that they can’t pay back the loan; it’s simply that their tax returns state a lower income than what they truly make, which can affect their ability to secure a home loan based on strict lending standards.

Instead of providing proof of income with tax returns, investors provide information about the property to help lenders calculate the DSCR — the property’s rental income divided by the mortgage debt. A DSCR of 1 or higher means that the borrower’s property earns enough money to cover the debt. Still, lenders typically like to see a DSCR of 1.25 or higher because it means the borrower has money left over to run their business and pay for additional expenses that can impact their ability to pay their mortgage.

Apply for a Non-QM Loan Today

Buying a house without a job is possible, but it may be harder to qualify for. The most important thing to consider is your ability to repay the loan. Not having a job doesn’t mean you don’t have income. However, you should ensure you have enough income compared to your debts to afford your monthly mortgage payments.

Can you get a mortgage without a job? Absolutely, but you’ll need to meet your lender’s requirements. Talk to a Griffin Funding mortgage specialist today to learn about home loan options for individuals with alternative sources of income, or apply online today. We offer a variety of Non-QM mortgage loans to all types of borrowers and can help you find the right option based on your unique circumstances.

Bill Lyons

Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.