Can You Buy a House Without a Job?

By Emily Southey | 10 minute read

If you’re currently unemployed, then you may be wondering if you can buy a house. Generally speaking, buying a house with no job is difficult, but it’s not impossible. Below, we answer this important question by outlining a few ways you can obtain a mortgage without a job, and some tips for doing so.

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Can I Purchase a Home if I’m Unemployed?

The short answer? Yes. Many unemployed individuals purchase homes (just think of retirees). Mortgage lenders are generally willing to approve mortgages to any borrower, so long as they can provide that they can repay the loan. Therefore, so long as you can provide a lender with proof that you will have no trouble meeting your monthly mortgage payments, you should be able to obtain a mortgage. And for those who are unemployed but may not have sufficient capital or investments, you may still have options thanks to “B” lenders and private lenders, who specifically provide loans to unconventional borrowers (for example, those with lower credit scores and incomes). Keep in mind that any and all information you can provide about your employment status and income levels will be helpful for mortgage lenders. Below, we outline a few circumstances that someone without a job might find themselves in. 

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Employed part time

While someone who is employed part time is not technically unemployed, they may be underemployed — especially when it comes to being approved for a mortgage. Someone who is employed part time typically works fewer than 35 hours a week. If you fit into this category, a mortgage lender is likely to ask you questions about the terms of your employment (for example, if you are salaried or paid hourly, how consistent your hours are, and how much money you earn). Even as a part-time employee, you will need to provide proof of income, so be prepared to show recent pay stubs, along with multiple years’ worth of T4s and a letter from your employer confirming your salary and the number of hours you work per week. Depending on the lender, they may use your lowest annual income from the past few years to calculate your rate or take an average of your last two years of income. Since income has a major role in obtaining a mortgage, showing proof of part-time income can be valuable and increases your odds of being approved for a mortgage from a traditional lender. That said, it may be difficult to afford a home on a part-time salary.

Unemployed

If you are unemployed, getting a mortgage will be more difficult unless you can somehow prove that you have a reliable income from another source. Examples of other sources include investment properties generating revenue, child support payments, retirement income, long-term disability payments, or royalties. Not only will you need to show proof of income, but you will also need to show evidence that the income is regular and consistent and is not at risk of being disrupted during the mortgage term. If you currently do not have a job or an alternative income stream, your options may be limited. 

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How to Obtain a Mortgage Without a Job

If you fall into the unemployed category mentioned above, there are several ways you might still be able to get a mortgage (and therefore buy a home). The following methods can be used in tandem or individually.

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You have other reliable income streams

Even if you do not currently have a job, a lender might still approve you for a mortgage if you have other reliable income streams. After all, there are many ways to generate income nowadays beyond a job. For example, some alternative streams of income that a mortgage lender may consider when reviewing your application include alimony payments, child support payments, rental property income, dividend payments, investment income, and retirement income. As is the case with a job, the goal of proving your alternate income is to show that you bring in enough money each month to cover your mortgage payments. 

You have major cash reserves

Another way to obtain a mortgage without a job is if you have significant cash reserves. For example, if you recently inherited a large sum of money from a loved one or have significant savings that are enough to cover your mortgage loan obligations, a mortgage lender may be more likely to approve your application — even if you are currently unemployed. 

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You have someone co-sign the loan with you

Borrowers without jobs may also be able to obtain a mortgage by having someone co-sign a loan with them. A co-signer is another individual (often a parent, spouse, or close relative) who agrees to take financial responsibility for your mortgage in the event that you are unable to make the required payments. Having a loved one in good financial standing vouch for you can go a long way when it comes to getting approved for a mortgage. 

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You make your spouse or partner the primary borrower

A fourth way to obtain a mortgage is to rely on someone else’s income, such as a spouse, and make them the primary borrower. This generally only works if you are buying a home with someone else, such as a partner, and they are employed, have a high credit score, and have a low debt-to-income ratio. For example, if you are currently unemployed but your partner has a full-time job, it may be best for them to take the lead on the mortgage application. This way, a mortgage lender will only consider your partner’s financial status, and your unemployment won’t work against you. Please note that this method may only work if your partner’s income is enough to meet the lender’s standards.

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You are gifted the money from a friend or family member

Being gifted enough money to satisfy a mortgage lender’s requirements is another — albeit less common — way of being approved for a mortgage. For example, if you have wealthy parents or other relatives who might be willing to help you with the homebuying process by gifting you a large sum of money, this can help get a mortgage. That said, a gift alone won’t be enough for a mortgage lender to approve your application, but it can help, especially if it allows you to make a larger down payment on a home.