7 Tips for Getting a Mortgage without a Full-time Job

Even without a full-time job, you can get a mortgage and buy your first home. With so many gig economy workers out there, it’s important to know how this changes your mortgage options. It’s not the same way it used to be and mortgage companies are adjusting.

If you work as a freelancer or you have several part-time jobs, you can still get a mortgage. You may not have the easiest financial situation to figure out and it may not be what most lenders prefer, but you’re not out of options.

Usually, lenders want to see residency, credit score, two years of employment history and more. However, with less people fitting into the normal box, many lenders have had to adjust. This doesn’t make it easy for freelancers and part-time workers to get a mortgage, however. Here are some of the tips you can use to make it easier to get a mortgage without a full-time job.

Make Sure You’re Organized

There isn’t a better tip on this list than this one. If you’re not organized, you will likely struggle to provide what your lender needs. Make sure your proof of income, proof of employment, references, previous employers, landlords and other information is easy for you to provide. You should also know where you stand with your credit report. You can get your score free and you should make sure you’re in good shape before applying for a mortgage.

Getting organized is vital for freelancers and part-time workers looking to get a mortgage. You have to have all your documents ready to go or you won’t convince a lender to approve your home loan.

Stop Some Deductions Immediately

As a self-employed person, you will often provide a Schedule C with your taxes. This will show many expenses you write off every year. This is great for the self-employed, except when you need to show proof of income for a mortgage.

Deductions are great, but when you use them, you may bring your income too far down for a mortgage company to be willing to approve you. While you may make $80K per year, your deductions may show you make less than $30K. Since the net income is used to get you approved, you may want to stop some of the deductions for a year or two in order to qualify.

Before you decide to stop claiming certain expenses, speak with a mortgage officer. They can help you reach our goals by telling you want you will need to show. You may still be able to use many of your write-offs without any issue.

Consider a Bank Statement Mortgage

You will likely have a higher interest rate, but a bank statement mortgage may be the right choice for a freelancer or part-time worker. Instead of using W-2s or tax forms to prove income, you will use bank statements showing deposits made into your bank account, along with a profit and loss statement for your business.

Lower Your Debt

Before applying for a mortgage, you can also pay down some of your debt. This is a great way to make things work better for the lender. When you have lower debt or no debt, it’s easier to get approved. This will help to improve your credit score and it will also help to lower your debt-to-income ratio.

Educate Your Lender

Just because you completely understand what you do for a living and how you get paid doesn’t mean your lender will. Make sure you can explain to your lender what you do for a living and provide documentation to support your income. Contracts with clients, consistency in your work and anything else that can help your lender understand you’re a solid candidate is a good idea.

Save a Larger Down Payment

One thing you can do to help tip the scales in your favor is provide a larger down payment. Some mortgage programs allow you to pay 3.5% down, but if you come in with 20% down, you’ll be in a better spot to get approved. This could mean waiting a bit longer to buy a house, but that also gives you time to get everything else in order.

Buy a Lower Priced Home

Sometimes, you don’t get approved for a mortgage because of the property you’re looking at. It may be out of your budget, or at least the budget the lender thinks you should have based on your income, credit score and other factors. Consider buying a lower priced home and starting with something.

Once you’ve owned a home for a few years, you can upgrade as your mortgage company will see you pay on time and you’re not a huge risk.

There are ways to get a mortgage even if you don’t work a traditional, full-time job. If you’re a freelancer or a part-time worker, use these tips to help make it easier to buy your next home.