You generally need to demonstrate sufficient income to buy a house, but it is possible to buy a home with no income. You’ll need to prove to a lender that you can afford the mortgage payments in other ways, such as by paying with assets, or you’ll need to buy the house with all cash. Learn more about how to buy a house with no income.
Key Takeaways
- You can buy a house without income, but you’ll need to demonstrate strong finances or pay in cash.
- A solid credit history, including a high credit score, may increase your chances of buying a home without income.
- You can buy a cash home whether or not you have income.
- Without income, you may need to seek alternative financing, such as a friends-and-family loan.
How to Buy a House With No Income
Mortgage lenders generally require you to have sufficient income before they provide you with a loan. When they review an application, they typically verify employment by confirming income documentation, such as recent pay stubs, W-2 forms, and tax returns.
But what if you don’t earn a traditional income? Perhaps you’re unemployed, retired, or wealthy, for example. In these cases, you may still be able to buy a house. However, the process of taking out a loan to buy a home without established income can be more complex than if you have verifiable income, such as paychecks from a full-time job. You’ll need to prove you’ve got enough money to make mortgage payments. Another option—if you have the money—is to buy a house in cash.
Here are steps you’ll generally need to follow to qualify for a home loan with no regular income:
- Determine how much you can afford to pay for a home: To do this, assess your finances, including your monthly debts and the amount of readily available cash.
- Check your credit report and credit score: If you plan to take out a home loan, reviewing your credit report and credit score will enable you to spot errors that could be harming your credit and to make changes aimed at boosting your credit score. You can check your credit report from the three major credit bureaus at least annually for free at AnnualCreditReport.com.
- Provide a down payment: When you’re taking out a mortgage, a down payment typically ranges from 3% to 20% of a home’s purchase price.
- Gather documentation: If you’re financing a “no income” purchase of a home, a lender will want to look at various documentation, such as tax returns and gift letters (if you’re relying on money from relatives), as well as investment statements, bank statements and other proof of financial assets.
- Get a co-signer: If your finances aren’t strong enough to qualify you for a mortgage, you may be able to buy a home if you recruit a co-signer who has a steady income or is wealthy.
When Is It a Good Idea to Buy a Home With No Income?
Your personal and financial situation will be a significant factor in determining whether buying a home with no income is a good idea.
Buying a home with no income may be a good idea if you own enough financial assets to comfortably make mortgage payments or buy a home outright. For instance, you may be a well-to-do retiree or have a large trust fund.
If you are taking out a mortgage to buy a house with no income, you’ll likely have to have a sufficient down payment. Your finances should be strong, with little debt and a healthy credit score. Ideally, your credit score should be at least 620 if you’re taking out a mortgage.
Buying a home with no income may not be a good idea if:
- You lack enough financial assets, such as savings or stocks, to comfortably make mortgage payments or buy a home outright.
- You have little to no cash for a down payment.
- You are unemployed and have no job prospects in sight.
- You’re saddled with too much debt.
- Your credit score is low.
- Your credit report shows you haven’t responsibly handled credit, such as making a number of late payments.
What You Need to Buy a Home With No Income
If you’ve decided that buying a house with no income is a good idea, you can likely benefit from:
- Mortgage pre-approval: Pre-approval confirms your creditworthiness ahead of signing a purchase contract.
- Verification of your identity: Provide an ID such as your driver’s license and Social Security number.
- Proof of financial assets: Provide documents such as bank statements and investment statements.
- Assets: You’ll need adequate cash for a down payment (unless you can secure a no-down-payment loan or make an all-cash purchase).
- Strong credit history: If you’re taking out a loan, having a stable credit history will increase your chances of getting approved.
Choosing a Lender
If you’re shopping for a mortgage lender, consider:
- Interest rates: Finding a mortgage lender with low interest rates can save you a substantial amount of money in the long run. Check rates at banks, credit unions, online lenders, and mortgage companies.
- Fees: Watch for fees like application fees, credit report fees, loan origination fees, closing fees, and attorney’s fees.
- Referrals: Ask friends, relatives, and colleagues for recommendations.
- Reputation: See if the lender has positive online reviews from other consumers.
Key Concepts and Industry Practices
Some of the key concepts and industry practices you should be aware of when shopping for a mortgage are:
- VA loans aren’t just for military veterans. Active-duty members and their families also can qualify for VA loans.
- You can qualify for a Federal Housing Administration (FHA) loan with a credit score as low as 500.
- Interest-only mortgages aren’t ideal. Although interest-only mortgages lead to lower payments for a certain period, they also result in not building up equity and making higher payments when the interest-only period ends.
What’s Negotiable
Among the items that you may be able to negotiate with a mortgage lender are:
- Interest rates
- Terms
- Fees
- Closing costs
Alternatives to Buying a Home With No Income
If you’re unable to take out a mortgage and buy a house with no income, consider these alternatives:
- Rent a place to live until you’re better positioned to make a purchase.
- Get financing from the seller.
- Borrow money from friends or relatives.
- Look into crowdfunding a home purchase.
- Investigate a rent-to-own arrangement.
- Explore paying cash for a lower-cost tiny home.
The Bottom Line
You can buy a house without income, but it’s certainly not the right move for everyone. For example, if you’re wealthy or have a substantial cash cushion, it might make sense to buy a house with no income. But if your credit is weak, you lack sufficient financial assets, or you’re unemployed, buying a home with no income may not be a wise financial decision.
Frequently Asked Questions (FAQs)
Is It Possible to Get a Mortgage With No Income?
It is possible to get a mortgage without income, but it will likely be more difficult than getting a mortgage when you do have income. Lenders will also consider other criteria, such as the amount of assets you have.
How Can I Buy a House With No Source of Income?
You can buy a house without an income source by making an all-cash purchase or by borrowing money from friends and family.
What Is the Lowest Income to Qualify for a House?
Lenders will vary on their requirements for income for a mortgage. The amount of income you need will also depend on the price of the home you want to buy. Typically, lenders will want your housing expenses and debt obligations to be no more than about 33% to 36% of your income.
What Mortgage Does Not Require Proof of Income?
A no documentation (no doc) mortgage does not require proof of income. But this type of loan is essentially illegal. Lenders must ensure you are financially secure enough to handle your loan.
