Can You Buy a Home If You Lost Your Job Recently?

Capacity

• To qualify for a home if you have recently lost your job you must show the mortgage lender that you have sufficient income to pay back a loan. Employment is not the only source of income creditors consider when deciding to offer a loan. Income from sources such as 401(k) plans, retirement, investments and rental property are often considered in loan underwriting decisions as long as the income is sufficient to cover the mortgage plus additional living expenses. Lenders may consider income from alimony and child support payments as well. If you have significant savings from a previous home sale or other sources, a mortgage lender may approve the loan based on the amount you have saved.
  
  

Credit

• Credit is a major factor in purchasing a home whether you are employed or not. Credit is important because it shows mortgage lenders that you pay your financial obligations as agreed. Lenders take risks whenever they extend credit to a customer. If you have poor credit, little savings and no job, it is unlikely you will be approved for a mortgage. However, if you have stellar credit and no job, lenders are more willing to consider other factors such as other mortgages you have paid off in the past as well as revolving credit accounts and installment loans that you pay on time. The lender is more comfortable offering a mortgage to an applicant with a good track record of paying bills.
  
  

Employment History

• Mortgage lenders review previous employment history if you recently lost your job. They look for stability, longevity and previous salary. The amount of money you made in a recent position gives lenders an idea of what you have the potential to make if and when you obtain a new job. Lenders also review how long you were with your previous company as well as the industry you were in. If you change employers every year or constantly change from one industry to another, lenders may view this as unfavorable. On the other hand, if you were with your recent employer for an extended period or at least employed in the same industry, lenders will most likely view this positively.
  
  

Considerations

• It is important to note that there are other means of buying a home without obtaining a traditional mortgage. Mortgage lenders have strict guidelines. Although some will approve you for a home loan without a job, many will not. If you recently lost your job, have some money saved and have decent credit, consider less traditional means of buying a home if you have been turned down for a conventional mortgage. Private investors and hard money lenders care less about your credit score and payment history and more about the asset you are acquiring and your ability to pay back the loan. If the home you are looking to purchase has value and you can afford a down payment, private investors and hard money lenders may approve you for a home loan.