You may have previously been denied for a mortgage if you were applying without income or without a job. However, there are options for you and reasons to have hope. Your ability to get financed for a no income loan will come down to your credit scores, down payment, assets, and the purpose for the loan.
No Income Loans
You can purchase or refinance a home without any income documentation at all. The loan options available to you will However, there are various reasons why a lender is not able to accept your income. We will go through those scenarios and will provide you with a no income loan option for each.
Loans for Unemployed People with No Income
If you are unemployed without any documentable income, you may have two mortgage options available to you:
- The first is a stated income loan. With this mortgage program, you are not required to document your income at all. The lender will rely solely upon your credit scores and down payment. A cash out refinance is available with this program but you may be limited to 70-75% of the appraised value of the home. Read more about stated income loans.
- The next program is an asset based mortgage for people without income but have a significant amount of liquid assets. This is often called an asset depletion loan and is perfect for people who are recently retired or who have sold a business and are looking to purchase their next home.
Loans for Employed People who Do Not Have Enough Income
One of the challenges that some people face is they have a steady job, but do not have enough income to qualify for the loan amount they need. If this is your situation, here are some options for you.
Find a cosigner – Adding a cosigner to your mortgage can help you to qualify by adding their income to your application. Something to consider is you will also bring the debt on their credit report into your application. This means you should look for a cosigner who has income but a small amount of debt. If the cosigner has bad credit, that can hurt your ability to qualify.
Consider an FHA loan – One of the benefits of an FHA loan is the program will allow you to stretch your income and qualify for a higher loan amount vs a conventional loan. This is a perfect solution for people who do have income, but just not enough. Read more about FHA loans.
Stated Income Loan – A stated income loan will allow you to gain an approval for a mortgage that you may not qualify for using a conventional loan. The down payment and interest rate for this loan is going to be higher.
No Proof of Income Loans For Self Employed
Most self employed individuals cannot qualify for a conventional mortgage because they have no real proof of income using tax returns. They are taking the legal tax deductions which means the actual income on the tax returns is much lower and sometimes even a loss.
The loan program for self employed is the bank statement loan. With this mortgage, you qualify using the average monthly deposits into your bank account without the need to supply tax returns.
If you are self employed, you can also apply for a stated income loan which was referenced earlier.
Read more about self employed mortgages.
Bad Credit No Income Loans
One great reason to purchase a home with an FHA loan is the ability to refinance that home in the future without documenting income. Not only will you not have to provide income or show that you have a job, but your credit scores also will not be taken into account for the approval.
The FHA streamline refinance will be approved if your current mortgage has been paid on time over the past 12 months and that you can show a benefit for refinancing (lower rate or change in the term of the loan). In our opinion, the FHA streamline refinance is the best no income loan because the rate will be lower than the other program options.
If you need something other than an FHA streamline refinance, qualifying for a mortgage without income and with bad credit will be difficult. Your only option may be a hard money loan.
Read more about FHA streamline refinances
No Income Hard Money Loans
Hard money loans are offered by private lenders and are usually used to purchase investment properties. Hard money lenders may ignore credit scores and will not ask for income documentation. They are going to mitigate risk by making sure you have a down payment and they will also put a lien on the property just like any other lender would.
Read more about Hard Money Lenders
No Income Mortgage Refinance
When refinancing without documenting income, you will be restricted in the loan to value ratio. You cannot borrow 80-90% of the appraised value of the home when you are applying with little to no documentation.
Your credit scores will be a huge determining factor in how much equity you will be able to access. You can expect most lenders to offer up to 75% of the appraised value when refinancing and cashing out equity.
In some instances, you have a situation where you are just refinancing to get out of the existing mortgage. Divorced couples may also need to refinance to remove the ex spouse from the mortgage. You can get a refinance divorce buyout to remove your ex even if you cannot document your income.