It is unlikely that an unconventional job will hurt your mortgage approval, as long as you can demonstrate a consistent and stable income stream that meets the lender’s requirements. Lenders are primarily concerned with your ability to repay the mortgage, and they will evaluate your income and employment history to determine whether you are a suitable candidate for a loan.

It’s also worth noting that the type of property you are seeking to purchase, as well as your credit history, debt-to-income ratio, and other financial factors, will all play a role in the lender’s decision. So while an unconventional job may not be a deal-breaker, it’s important to make sure your overall financial profile is strong before applying for a mortgage.

How an Irregular Job Influences Your Mortgage Approval

An irregular job, such as freelance work or self-employment, can make the mortgage approval process more complicated, but it doesn’t necessarily mean you will be denied a mortgage. The primary concern for lenders is whether you have a stable income that will allow you to make your mortgage payments on time.

If you have an irregular job, you will need to provide more documentation to prove your income, such as tax returns, bank statements, and client contracts.

Lenders will look at your income over the past few years to determine if you have a consistent and reliable income stream. They may also consider the nature of your work and whether it is likely to continue in the future.

In some cases, lenders may require a higher down payment or charge a higher interest rate to offset the perceived risk of an irregular job. You may also need to have a higher credit score or lower debt-to-income ratio to qualify for a mortgage.

Ultimately, the impact of an irregular job on your mortgage approval will depend on a variety of factors, including your financial history, the type of property you are purchasing, and the lender’s specific requirements. Some lenders may have stricter requirements for certain types of jobs or income sources. In these cases, you may need to provide additional documentation or demonstrate a longer track record of consistent income to qualify for a mortgage.

Non-QM Option

Non-QM (non-qualified mortgage) loans are a type of mortgage loan that does not meet the qualified mortgage guidelines established by the Consumer Financial Protection Bureau (CFPB) in 2014. Qualified mortgages are designed to ensure that borrowers have the ability to repay their loans, based on certain criteria such as debt-to-income ratio, employment status, and credit history. Non-QM loans are typically used by borrowers who do not meet the requirements for a qualified mortgage.

Non-QM loans may have different requirements than traditional mortgage loans, such as higher interest rates, larger down payments, and shorter repayment terms. They may also be used for non-traditional properties or for borrowers who are self-employed, have irregular income streams, or have a poor credit history.

Because they are considered riskier than qualified mortgages, non-QM loans are generally only offered by a limited number of lenders and may be subject to higher fees and interest rates. It is important for borrowers to carefully consider their financial situation and the terms of the loan before applying for a non-QM loan.

It’s important to work with a knowledgeable mortgage professional who can guide you through the process and help you find the right loan for your situation.

Filed under: Real Estate by Julie Woodward
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Twenty years ago the economy was putting the dot-com bubble behind it, and people were buying homes. The high majority of folks worked for someone else; they received a paycheck, were given a W-2 from their employer, and filed their income tax returns accordingly.

This also provided easy documentation to loan officers when folks wanted to borrow a mortgage to buy a home. As of 2019 36 percent of workers in 2020 were identified as bona fide gig workers per the federal government, or a bit more than 1 out of every 3 workers. That change translates to mortgage application processes today.

However, house loan processes have been particularly strict since 2009, especially due to how flexible and liberal loan reviews were at the time during the 2000s real estate bubble that ended that year and almost took down the major banking system in the collapse. For gig workers who essentially function as their own small businesses or as independent contractors, there is no consolidated income report aside from income tax filings.

Most have earned their money from multiple sources to make up a full living income. As a result, matching gig income to a traditional mortgage model can be challenging. Here’s what gig workers should anticipate and be prepared to answer as a result.

Definitive Proof of Income

For the gig worker proof of income is practically the same as showing how a small business produces a net profit sufficient to be invested in when asking for a business loan. As a gig worker, you won’t have a W-2 statement that is accepted as universal proof of your income and ability to pay a loan payment. So, you will need to provide a substitute that can be independently verified.

That means your income proof will need to show your bank statements evidencing all major payments coming in as well as matched by your IRS Schedule C and IRS Form 1040 showing how your income is arrived at. Because IRS forms are under penalty of perjury, they are considered a reliable income proof source for lenders. Some lenders may go further and want to see MISC 1099 forms received by clients for the last three years as well. Bank statements can reinforce assets’ availability as well, but they are not a full substitute.

Keep Your Credit Card Debt Nil or Low

Many independent workers ride on credit cards to pay bills in between jobs. Unfortunately, this also inflates personal debt, which mortgage lenders don’t want to see. To be successful with a mortgage as a gig worker, your credit card balances need to be kept as low as possible. You can have other debt, but it is best to be structured like a student loan or car loan. These don’t change from month to month and are predictable, but a credit card balance can grow quickly, creating a lending risk. Pay pending bills, lower the balance, and shift the debt to other financial tools if you can. The less revolving debt (credit cards), the better.

Boost the Down Payment

Having a larger down payment works wonders in any mortgage application. The traditional amount is 20 percent of the price of the home you want to buy. If you’re in that range, great. If not, save more. Talk with your lending professional to find out about lower down payment options as well. Don’t forget your closing costs. In some cases, those can be contributed by the seller of the home. Once again, your lending professional will be able to give you the best advice for your situation.

Be Realistic

Finally, don’t apply for a mortgage well beyond your income level and savings. You’re just wasting a lot of time and setting up for a disappointment. Focus instead on having a sizable down payment, documented income, and a home price well within your combined payment range. This will bolster your application and resolve a lot of concerns that otherwise get a denial.

Talk with your real estate and mortgage lending professionals for details based on your personal situation.

Filed under: Real Estate Tips by Julie Woodward
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According to the Federal Reserve’s quarterly Senior Loan Officer Survey, it’s getting easier to get approved for a home loan.

Between July – September 2012, fewer than 6% of banks tightened mortgage guidelines — the fourth straight quarter that’s happened– and roughly 10% of banks actually loosened them.

For today’s buyers and refinancing homeowners in Corpus Christi , softening guidelines hint at a quicker, simpler mortgage approval process; one which gives more U.S. homeowners better access to today’s ultra-low mortgage rates. 

However, although banks are easing guidelines, it doesn’t mean that we’re returned to the days of no-verification home loans. Today’s mortgage applicants should still expect to provide lenders with documentation to support a proper loan approval.

Some of the more commonly requested documents include :

• Tax returns, W-2s, and pay stubs : In order to prove income, lenders will want to see up to two years of income documentation. Self-employed applicants may be asked for additional business information. Borrowers earning income via Social Security, Disability Income, Pension or other means should expect to provide documentation.
• Bank and asset statements : To verify “reserves”, banks will often require up to 60 days of printed bank statements, or the most recently quarterly reports. Be prepared to explain deposits which are not payroll-related — banks adhere to federal anti-money laundering laws.
• Personal identification documents : To verify your identity, banks often require photocopies of both sides of your drivers license and/or U.S. passport, and may also ask for copies of your social security card.

In addition, if your credit report lists collection items, judgments, or federal tax liens, be prepared to discuss these items with your lender. Sometimes, a derogatory credit event can be eliminated or ignored during underwriting. Other times, it cannot.

The more information that you share with your lender, the smoother your mortgage approval process can be.

As the housing market improves and lender confidence increases, mortgage guidelines are expected to loosen more. 2013 may open lending to even more mortgage applicants.

Filed under: Mortgage Guidelines by Julie Woodward
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