Mortgage Loans — Do You Need A Full-Time Job To Get A Mortgage

Applying for a mortgage is a very serious step that should not be taken lightly as a function of one’s income or place of employment. Lenders need to be sure that the borrowers are able to meet their loan obligations, and this is why the stability of income is a condition of receiving a mortgage.

However, it is not mandatory to have full-time employment if you have other adequate means of income generation. This article focuses on the Mortgage requirements for income and jobs.

So, let’s find the answer to the question: do you need a full-time job to get a mortgage?

Are There Any Stringent Full-Time Employment Policies When Borrowing?

Full-time employment is not necessary for a borrower to get a mortgage with those lenders as we have seen in the research. Of course, when one has a steady, fixed employment, it becomes possible to substantiate the existence of steady income.

However, lenders today also understand that most people present additional income from side hustles, freelancing, investment, and the likes. The only criterion that remains is that it must be proven that for the last two years, the sources of income that are relied on have been steady.

It means that it is not necessary to have a full-time job, but, on the other hand, it is necessary to have stable earnings. This will be easier for you to get your loan application approved since the business is bound to have a steady cash inflow.

What Papers Do Lenders Want You to Submit for Income Verification?

Employers need to be shown proof of income amounts and sources. If you are an employee, you must provide your pay stubs and the previous two years’ tax returns.

The self-employed borrowers should submit their business income tax returns and balance sheets. Full and proper disclosure from the borrowers’ end makes the loan application process less complex.

You should provide all possible information regarding the income you have, whether you have a job, have other odd jobs, own investment, renting houses or businesses, etc.

How is Self-Employment Income Assessed?

If you are a self-employed borrower or have a second job, lenders pay special attention to the steadiness and regularity of your income in the previous several years. Improper earnings show that they are irregular and therefore cannot be relied on.

After knowing self-employed mortgage loan requirements, you will need to submit tax returns of the last two financial years so the lenders can analyze the trends of the income and expenditure of the business. If you have regular customers, it will be easier for you to get your loan application approved since the business is bound to have a steady cash inflow.

Some of the negative impacts that may be realized from a volatile income include; High risks of inability to meet the mortgage payment due to unpredictable income.

What is the bare minimum that lenders want to see?

There are different rules that can be set from one lender to another; however, the general rule here is that your total monthly debt should not exceed 36 percent of your gross monthly income.

The down payment varies depending on the type of loan, but your total monthly housing expenses should not exceed 28% of your total income. Understand that qualifying income ratios can sometimes be more relaxed if one has sound assets, adequate reserves or down payment, and good credit scores.

However, in the current world, credit crunch has forced lenders to focus on the most probable and stable income earners in order to offer mortgages.

Conclusion

In conclusion, it can be stated that the applicant does not have to be employed full time in order to qualify for a mortgage. What is most important is that the applicant must have two years of stable and verified income from any source that the person uses to pay for living expenses.

Yes, self-employed and gig workers can apply, but they will be required to prove other sources of income for 24 months. Before applying for a mortgage loan, it is important to assess your ability to generate income as well as the costs associated with the property you want to purchase.