How can I get a mortgage loan without a current income?

Question

Hello! I currently have $150K equity in my current home and $300K cash on hand. I am looking to sell my current home and buy a new primary residence($500K value) but dont have a monthly income. I recently cashed out of a startup and working on a new venture. I can easily put 30-40% down.

Whats your advice in this situation. A mortgage lender told me to use a DSCR loan and just move in to the property as a primary residence?! I dont want to deal with legal issues down the road. Are there other ways to obtain a mortgage loan without a current income with a good amount of cash on hand? Thanks so much for your help in advance

Bryan Maddex · Answer

Please run from the lender that told you to do a DSCR loan and then move into the house! That is occupancy fraud and that lender should be reported. There are "no income" loans in the marketplace. 20% down is required and rates are in the 9s. You also need 12-24 months of reserves so need to hold back some of your down payment money possibly depending on other assets that you may have.  I tell a lot of clients "Just because there is a product, doesn't mean you will like it" lol! There are actually 2 companies that do these no income loans. Alternatives?  Can you get a no occupying coborrower to sign with you? If you are retirement age, you can do asset based withdraws from "work related funds" (IRAs/401ks...). Bank statement loans likely will not help you until you have been doing your new venture for 12 months and have some deposit history. Feel free to message me if you want to go over the no income options.

Albert Bui · Answer

Short answer is yes there are no income products and or stated income products you could utilize till you eventually start filing an acceptable form of income to qualify back for full documentation loans again (eventually). Exactly how long you have to ensure this gap of timing before you can qualify for full doc again depends on your specific situation. The fastest way back is getting a full time job or acquire rental properties/units/apt's since rental income can be used instantly (75% of gross - PITIA monthly payment = net rental Income asap/instantly).

All other forms of full doc income receipt of the income to utilize it on a loan application like alimony (needs 3-6 months of receipt + 36 months of continuation). There are some forms of income that do not require any receipt to use which are some of the above (full time job just offer letter or ownership of newly acquired rental property (lease agreement + security deposit/rent proof only).

If you dont plan to go back to full doc then stay in the no income/state world and the premium for these products varies between 1-2.5% higher than full doc fannie/freddie/FHA/VA rates but pros and cons right?

Plan accordingly and know what your gap of timing is and how or when you can utilize all your lending options again and which options you have at this moment. Thats the key, with out knowing all of this then its just a shot in the dark or having bits and pieces of info and trying to solve the financial freedom equation with out the full "picture."

We're doing these mortgage planning meetings on a daily basis.

@Matthew Kwan

@Carlos Valencia

Sara Robin · Answer

thanks for your response and helpful information! really appreciate it

Jake Andronico · Answer

@Sara Robin

Wow, you're in an awesome spot!!

What if you just payed cash for the property you want after selling your house? Do you need to upgrade?

Definitely don't recommend committing mortgage fraud...that's pretty crazy a lender told you to do that.

If you don't have an income, it's close to impossible to get an owner occupied home loan.

How would you plan on paying it every month?

Food for thought!

Carlos Valencia · Answer

Hello Sara,

If you have no monthly income how are you going to pay for the mortgage? Even with 30-40% down. I'm assuming you will have some money still left over after putting down that 30-40% down after closing costs.  What is your game plan in terms of surviving and paying off the rest of the 60% of the mortgage? Unfortunately many lenders will see this as a red flag and may not take the risk to lend you the rest of the money even if you use stated income program or bank statement program but those are for self employed borrowers who have active income from their business but write off to many expenses that when filling their taxes their net income is really low or sometimes negative. Therefore these other programs are good option for those  business owners. But at the end of the day there is active income to account for. In your case there is nothing other than just having your remaining equity and money left over from the start up. Unless you can show any type of active income from self employment, retirement accounts, disability income, rental income just something and enough to qualify then you will be able to find a lender that will lend to you. Only option for you would be DSCR loan but that is for investment property so unless you are just trying to acquire another property to build your real estate portfolio then that is the best option for you. The final option is just purchasing cash if you can find a property for 450k . The you drain all of your savings unless you have more and how will you pay your taxes and insurance? I would wait to start that new venture you mentioned and see how that goes because last thing you want to do is get yourself in a situation where you lose everything. Stay where you are and live below your means until that new venture takes off.

@Albert Bui @Matthew Kwan

Chris Seveney · Answer

I would see if you could do a rent to own or seller finance. you are going to have trouble getting financing without income for a primary residence as the lender has to follow federal guidelines and your ability to repay - which if you do not have income that makes it challenging to qualify.

Melvin List · Answer

Agreed. There are lots of stated and no ratio type of mortgage loans out there but it will always come down to what are you willing to pay

How can I get a mortgage loan without a current income?

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