“You mean I need a job to get a mortgage?”
“Yes, in this case you do.”
“I’ve paid all my bills on time all these years and now you’re telling me I need a job to buy my first home?”
This was a recent conversation we had with a potential borrower. Unfortunately in this market and in this day most borrowers will need to have a stable income source to qualify for a mortgage. You can’t just state your income anymore and obtain 100% financing, regardless of your credit score. Below is a diagram we’ve used for many years to explain how a proper lending decision is made. My wife Aimee calls it the “Four Corners of Home Financing” and it shows you the four things we lenders look at when we make a loan decision.
The four items need to be in a healthy balance to obtain the right kind of financing. Here is what the text says if you’re having a hard time reading:
Income/Employment
The source of your income and your employment history
Credit Score
An outline of your credit history and resulting score (scores range from 350 to 850)
Assets
Your savings, any investments and retirement uses as a source for down payment, closing costs and reserves.
Property
The type of home (condo, townhouse) and for the purpose (primary residence, second home or investment)
Hat/Tip: Aimee Ghimire
Using the $8,000 Tax Credit to Cover FHA Loan Costs
Loan Modification 101 – Part 4 of 6
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on Aug 16th, 2007 at 2:56 pm
[...] The Arizona Mortgage guru informs us that you do in, in fact, need a job to get a loan. [...]
on Aug 16th, 2007 at 6:47 pm
Oh my stars – this is so true. I was having lunch with a dear friend of mine today and she was telling me a story about a buyer who was trying to purchase a house without having a job. Their reasoning? You need a house to have an address. Can’t get a job without an address? Well … don’t you need a job to buy a house?
Sounds like a catch 22 to me. Isn’t it more like which came first – the chicken or the egg?
Nice blog, Shailesh & Aimee – Calie
on Aug 16th, 2007 at 7:35 pm
You need to post this blog on AR AND have it in the Sunday’s ad! Great post!
on Aug 17th, 2007 at 7:35 am
Calie,
How funny. I don’t really see the house/job thing as a catch 22 but I guess some people do.
Ma,
I will put a modified version of this on AR. I think some agents will appreciate the story in this climate.
Thanks,
Shailesh
on Jan 26th, 2009 at 2:48 pm
You don’t need a job to get a house; you need verifiable income. If your income is from public assistance, alimony, or child support but is sufficient and your credit is okay, you can get a mortgage. It is in fact ILLEGAL to discriminate against people with this kind of income. In addition, income from investments is allowable as long as you can prove that it will continue for at least three years. Ditto for loan repayments if you have loaned someone money and he is repaying you faithfully.
So you do NOT in fact need a job to buy a home.
on Feb 7th, 2009 at 1:34 pm
Very good point. Verifiable income is key. For most people this translates into a job, but still there are situations which this does not apply.