How to Get a Mortgage Without a Job

Can You Get A Loan Without A Job?

Yes, you can purchase a home or refinance if you’re unemployed, though there are additional challenges. There are a few things you can do to improve your chances as well.

Many lenders want to see proof of income to know that you’re able to repay the loan. Of course, just because a mortgage applicant is unemployed does not mean they won’t repay the mortgage.

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Can you qualify for a mortgage with unemployment income?

In most cases, unemployment income cannot be used to qualify for a mortgage.

If you were laid off and just started receiving unemployment, you’ll have to wait until you start a new job — or at least have an offer letter in hand — to buy a house.

The only exception to this rule is for seasonal workers who have a regular history of receiving unemployment.

For example:

  • You’re a contract worker who works six months each year and earns $90,000
  • You receive unemployment income the other six months of the year
  • You have maintained this same schedule and income level for at least two years
  • A lender might approve you based on your regular income and unemployment income combined, using the average yearly income over the past two or more years

However, this is a rare scenario restricted to seasonal workers. In almost every other case, unemployment income will not help you qualify for a mortgage.

Refinance Options For Those Who Are Unemployed

Unemployed individuals have options for refinancing their home without a job should the need arise.

FHA Streamline

An FHA Streamline Refinance is designed to help homeowners with an existing FHA loan to lower their interest rates and reduce their monthly payments with less time and effort. You may be eligible to obtain one using a simplified process that requires you to meet a minimum of qualifying factors − and your lender may not even need to verify your income. This allows for an easier and more rapid approval process.

VA Streamline Refinance

A VA Streamline Refinance is backed by the federal government. However, it’s specifically designed to help veterans and servicemembers refinance their existing VA loan to obtain lower interest rates, smaller monthly payments or different terms.

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4. Non-revocable employment contract

If you have a job lined up, you can ask your employer for a non-revocable employment contract, which guarantees employment for a specified amount of time. But be warned, these contracts rarely apply to those who aren’t pilots, doctors, or teachers.

Where to Get a Personal Loan

A personal loan, which doesn’t require you to secure it with property such as real estate or a car, is the type of loan best suited for getting ready cash quickly. Personal loans are available from many lenders.

A great place to start looking for any loan, unemployed or not, is the financial institution where you have your checking account. Even in a world of automated decision making, an established relationship can still work in your favor.

If your preferred institution is a bank, consider applying for a loan at a local credit union as well. Credit unions often have competitive rates and may also have lower credit score requirements than banks. If they extend a loan offer you want to take, you’ll have to become a credit union member before the loan is processed. Membership usually requires an open account with at least a few dollars in it—a small price for a good deal on a loan.

Online financial institutions, including peer-to-peer lending sites, typically provide quick lending decisions, and it’s easy to use them to submit multiple applications at once.

Online services, such as the Experian CreditMatch™ personal loan finder, can show you loan offers suited to your FICO® Score.

How much income do you need for a mortgage?

Mortgage lenders don’t just look at the length of your employment history. They evaluate your income level, too.

However, the methods most mortgage lenders use to calculate income can put some borrowers at a disadvantage. This is because not all income may be counted as “qualifying” income.

Here’s how most lenders view different types of income when it comes to mortgage qualifying:

Type of IncomeYears History Required
SalaryCan use full amount immediately, with offer letter or first pay stub
BonusTwo years’ history required
CommissionTwo years’ history required if more than 25% of income
OvertimeLender will average two years’ overtime earnings
Hourly Preferably, two years' average will be used if hours fluctuate
Second jobTwo years’ history of working both jobs simultaneously

How salary is calculated for a mortgage

When your income is an annual salary, your loan officer divides your annual gross (before tax) income by 12 to determine your monthly income.

In general, you do not need to show a two-year history — especially for jobs that require specific training or background.

How bonuses are calculated for a mortgage

When you bring home an annual salary plus a bonus, your lender calculates your income in two parts.

First, your lender divides your annual salary by 12 to determine your monthly income. Then your lender looks at bonus income separately.

If you have received bonus income for at least two years, and the employer indicates the bonus income will continue, lenders can consider it “qualifying” income.

Underwriters normally divide your last two years of bonus income by 24 months to arrive at a monthly average.

However, as with any income, if lenders see it has been dropping year-over-year, they may choose to discount or even ignore this income.

How hourly income is calculated for a mortgage

Typically, lenders multiply your hourly rate by the average hours you work.

The table below shows Fannie Mae’s guide to income calculations.

How Often PaidHow to Determine Monthly Income
AnnuallyAnnual gross pay / 12 months
MonthlyUse monthly gross payment amount
Twice MonthlyTwice monthly gross pay x 2 pay periods
BiweeklyBiweekly pay x 26 pay periods / 12 months
WeeklyWeekly pay x 52 pay periods / 12 months
HourlyHourly pay x average number of hours per week x 52 weeks / 12 months

Erratic work hours or recent job changes can harm your income calculation.

Those with little work experience who also earn hourly wages can experience difficulty when applying for their first mortgage.

How overtime pay is calculated for a mortgage

When you earn wages plus overtime pay, your lender totals your prior two years of overtime pay and divides the total by 24. That’s your qualifying monthly overtime pay.

Again, if this extra pay declines over time, the lender may discount it, assuming the income won’t last three more years. And without a two-year history of overtime pay, your lender will probably not allow you to claim it on your mortgage application.

How commission income is calculated (if it’s 25 percent or more)

When you earn at least 25 percent of your income from commissions, your base income is the monthly average of your last 24 months of income.

If you have less than 24 months of commissioned income, your lender probably can’t use it for qualifying.

There are exceptions. For instance, if you work for the same company, do the same job, and earn the same or better income, a change in your pay structure from salary to fully or partially commissioned might not hurt you.

You have to make the argument, however, and get your employer to confirm this.

How self-employed income is calculated for a mortgage

When you are self-employed, mortgage lenders require at least two years of income verified by your tax returns. They then use a complicated form to determine your “qualifying” income.

Understand that your gross revenue (before income tax deductions) is not the figure that lenders use when calculating your qualifying income.

Lenders have been known to make exceptions to this rule — specifically, for recently self-employed persons who have started a business in a “related field.”

It’s not uncommon today for employees to continue working for the same company, switching to “consultant” status, which is self-employment but getting the same or more income. These applicants can probably skirt the two-year rule.

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. 

Should you cancel your mortgage application?

Losing your job during the mortgage application process is stressful, but you have a variety of options and it’s important to consider all of them with care. Talk with your trusted advisor before proceeding. Together, you can review your options so you can make an informed decision.

Home Lending Customer Service

Go to Chase mortgage services to manage your account. Make a mortgage payment, get info on your escrow, submit an insurance claim, request a payoff quote or sign in to your account. Go to Chase home equity services to manage your home equity account.

Steady salary is what matters

Kris Shenton, sales manager with Equity Prime Mortgage in Crofton, Maryland, said that a new job isn’t always a hurdle for borrowers. As long as the new job pays a salary, and isn’t based solely or largely on commissions, then an applicant should have little trouble qualifying for a mortgage, as long as that new salary provides a large enough income to support the borrower’s new monthly mortgage payments, Shenton said.

Complications can pop up when borrowers are relying on non-salary income, Shenton said. Borrowers who have gone from a salaried job to self-employment will need to show at least two years’ worth of tax returns to prove that their new income is stable and not likely to disappear any time soon. If they can’t provide these returns, lenders won’t consider these self-employment dollars as part of their qualifying income.

Borrowers who switch to a new job in a different field, might give lenders some pause. But most lenders are willing to overlook the job change as long, again, as the new job pays on a salary basis, Shenton said.

“If a borrower is switching a line of work, say the borrower was a scientist and is now a lawyer, then it’s case-by-case,” Shenton said. “Though typically, so long as it is a salaried position, you are fine to get a mortgage now.”

Pros and cons of a no-doc mortgage

ProsCons You won’t need income documentation.You’ll need a higher down payment. You may qualify with just your assets.You’ll pay a higher interest rate. You may be approved even if your income recently dropped.You’ll need better credit than other loan programs require

What if you just got a new job?

If you’ve just begun a new job, it’s a bit hit-or-miss how lenders will view your new employment opportunity. More often than not, lenders like to see a two-year work history at the same company or within the same industry. Once you have a job though, lenders do view your job as permanent and ongoing which works in your favor. 

If you only had a brief employment gap after a long history of steady employment, you’ll likely find a lender who won’t hold that against you. Again, responses to this situation may vary, which is why it’s important to shop around for the right mortgage loan. You can prequalify for a loan with more than one lender to get an idea of what loan amount each lender is likely to approve you for. Then you can focus on applying for mortgages with the lenders who are more likely to give you a favorable loan amount and interest rate.

Other Resources

Click here to get today’s latest mortgage rates (Jul. 3, 2022).

Carter Wessman

Carter Wessman is originally from the charming tow

Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.


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