Can You Get a Mortgage Without a Job?

It’s possible, but it’s not always a good idea

Person packing up a box of belongings in an office
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Lenders are looking for a solid investment when they approve a mortgage, which is why you’ll face rigorous documentation requirements and stringent income checks after applying for one. So, can you even get a mortgage without a job? The answer is yes, but you’ll have to meet other criteria for this to work. 

Let’s take a look at how to get a mortgage without a job, what it looks like when shopping for one, and the downsides to acquiring a mortgage while unemployed. 

Key Takeaways

  • It’s possible to get a mortgage without a job, though you’ll want to consider the downsides.
  • Banks will allow for other sources of income when considering a mortgage application, including alimony, retirement benefits, and even unemployment payments, in limited cases. 
  • You’ll likely be required to pay higher interest rates and down payments when looking for a loan when not working. 

Mortgage-Shopping While Unemployed

There is a wide variety of mortgages available for every type of customer. Specific requirements will differ, depending on the loan you’re seeking, but income is a pretty universal criterion in order to be approved. That said, it’s still possible to get a mortgage while unemployed; banks can and will consider nontraditional methods of funding your loan. 

Having a Co-signer

Those with a limited credit history already may be familiar with co-signers. In this case, another individual also will attach their name to your loan. A co-signer can be anyone you know, like your parents or close friends, but becoming a co-signer can be considered risky for those agreeing to this commitment. Like you, co-signers take on the liability for your mortgage. This means that if you default, they’re on the hook for making payments. 

Relying on Investments

Do you have a nontraditional source of income, such as sizable dividend payments from a stock portfolio? It’s possible to use money derived from these sources to qualify for a mortgage, but you’ll need to meet certain requirements. This will depend on your lender, but may require that you’ve received this income for at least two years.

You’ll need to provide proof of your assets, as well as signed tax returns or account statements showing the history of your income. 

Employing Cash Reserves

There are nearly always costs associated with getting a mortgage, such as a down payment and closing costs, but if you have significant cash reserves, your lender may be willing to approve your loan, even when you don’t hold a job. 

This may be the case if you’re in between work and searching for another job, but it also applies if you’re not planning on returning to regular employment. In either scenario, your lender will want proof that you have the ability to make regular mortgage payments until the loan ends.

Securing a Job-Offer Letter

Are you in the middle of changing jobs? Whether you’re relocating elsewhere or have simply opted to start with a new company, many lenders are willing to accept job-offer letters as proof of future income. There are restrictions tied to this, which you’ll want to check with the bank you’re using. 

Other Sources of Income

Many other sources of income can be used to help you qualify for a mortgage, including alimony, unemployment, child support, disability, public assistance, retirement benefits, and even U.S. Department of Veterans Affairs (VA) benefits. As always, you’ll need to meet certain requirements for this income to qualify. You may, for example, need to prove that you’ll continue receiving these benefits for at least three more years.1 

Although unemployment benefits generally are considered short-term in nature, these payments also can be used as income in special cases. This is true if your unemployment arises as a result of seasonal employment, for example. 

Downsides To Getting a Mortgage Without a Job

When a lender chooses to approve you for a mortgage without employment, they’re taking on increased risk. As a result, they’ll pass on some of this risk to you, with aspects such as:

  • Higher interest rates
  • Lowered borrowing ability
  • Shorter-term loan lengths
  • Stricter approval requirements
  • Larger down payments

This is true for any loan type when you’re not working, including personal or other unsecured loans. You’ll also want to consider the personal risk you’re taking on when getting a mortgage without a job. Defaulting on a mortgage can have a long-term negative impact on your credit history and may cause other difficulties in your life. 

How To Get a Mortgage Without a Job

The steps for getting a mortgage without having a job are similar to those you’ll need to take when working. First, you’ll want to take a look at your credit. The higher your credit score, the better—lenders will review these scores to determine your risk, so a better score can translate into lower interest rates. 

Lenders are looking for stable, steady borrowers, which means you’ll want to avoid acquiring any new debt before applying for a mortgage. 

If you’re happy with your credit score, you’ll then want to calculate your housing budget. This will be affected by your down payment and how much home you can afford. Be careful not to overspend; being house-poor can leave you vulnerable in case of emergencies. 

Once you’ve decided on a budget, you’ll want to gather your paperwork. This will include documents such as bank statements, tax returns, evidence of any additional sources of income, proof of funds, and your Social Security number.

Depending on how you're planning to qualify, you’ll likely also need other paperwork. For instance, if you’re relying on a co-signer, you’ll need to provide their information as well. 

After you’ve gathered everything, you should search for a lender. Be aware that interest rates and fees can vary significantly among lenders, so rate-shopping is always a good idea. 

When you and your lender have come to an agreement, you’ll receive a pre-approval letter, which you can take with you on your home search. After that, it’s a matter of finding the right property, submitting all your documentation, and closing on the loan. 

Frequently Asked Questions (FAQs)

How much money do I need to buy a house?

The amount of money you’ll want to have saved in order to purchase a house will vary depending on your loan type and purchase price. In most cases, you’ll need to put down a minimum of 3% of the home’s purchase price, while closing costs range between 2% to 7%.

What is a good credit score to buy a house?

Credit scores range from 300 to 850 and are impacted by many factors, including the length of your credit history, how many accounts you have open, your total credit utilization, and your mix of accounts. A good credit score is considered to be in the 670 to 739 score range.

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Article Sources

  1. Fannie Mae. “Selling Guide.”

  2. Experian. “How to Get a Loan if You Don’t Have a Job.

  3. Consumer Financial Protection Bureau. “Create a Loan Application Packet.”

  4. Entitle Direct Insurance. “The Smart Consumer’s Guide to Reducing Closing Costs,” Page 4.

  5. Consumer Financial Protection Bureau. “Determine Your Down Payment.”

  6. Experian. “What Is a Good Credit Score?