August 15, 2023 FOGA

No Income? No Problem!

Real Estate

Did you know that you can get a mortgage without having a job? Cause you can. As completely insane as it sounds, there is a loan that you can get where you don’t even need to have a job. How you ask (or maybe you don’t but you’re still reading so let’s say you do)? As with most things, if you have enough money, you have more options.

This is a type of portfolio loan offered by some lenders. The requirements of the lenders I have worked with boiled down to having these three things:

1. 660+ credit score
2. 20% down payment
   • This is 20% of the purchase price.
     • Example: 20% of 400K is 80K
3. 12 Months in reserves
   • This is 12 months’ worth of mortgage payments on the home you want to buy in your possession.
     • Example: A $3000 mortgage payment would require $36,000 in reserves.
   • Reserves can be savings or stock. Some lenders allow 401K and/or IRA accounts to count towards this as well.
   • The reserves are funds in addition to the 20% down payment.

With those three things, you would qualify for this loan. The main negative is that your interest rate will be higher than on a normal loan. For example, if normal rates are around 7%, these would be around 10% (mandatory disclaimer: these are not real rates since those are dependent on individual financial history credit score and I am not a licensed loan officer). So, you would more than likely want to refinance this loan in the future.

This loan is clearly not for the vast majority of people, but it does work for someone. But that was a thing I learned recently and wanted to share.

What do you think of this loan?

Feature Photo by Anushka Sharma on Unsplash