The economic turmoil of the last 18 months drove many people out of work, forcing them to put a hold on their plans, including their homebuying plans.
However, by maintaining your finances and with a strong employment offer letter, refinancing or buying a home is possible for those who are unemployed for a brief time.
So, can you get a mortgage while on unemployment?
Related: 5 Mortgage Myths Debunked
Can You Apply for a Mortgage Without Having an Income?
If an applicant is applying on their own, it’s unlikely they can get a mortgage. However, applying with another person increases their chances of being approved. For example, couples apply for a mortgage with scenarios where one person works and the other doesn’t. Applying for a mortgage while on unemployment isn’t much different.
However, it’s worth noting that a single-income household may be eligible for a smaller mortgage than a dual-income household. So while an applicant can qualify for a mortgage if they count their partner’s income, they might struggle to get the loan amount they seek.
Can Unemployment Benefits Count as Income on a Mortgage Application?
Anyone receiving unemployment benefits will most likely not be allowed to count them as a source of income. Typically, lenders will require proof of at least two years of income from a steady source.
Mortgage lenders need to verify that sources of income on an application are likely to continue for the next three years.
There are several documents mortgage lenders will need from homebuyers:
- Pay stubs.
- The last two years’ W2 forms.
- The last two years’ income tax returns, if self-employed.
- Bank statements.
So while someone on unemployment benefits might have a lengthy work history and an adequate down payment, they cannot show steady future income.
Additionally, most states allow unemployment benefit eligibility for a maximum of 26 weeks, falling below the three-year threshold.
What Options Do Unemployed Mortgage Applicants Have?
There are several options for applicants who are currently unemployed but would like to apply for a mortgage.
Some mortgage applicants worry that losing their job means the required two-year work history will restart. The positive news is that you probably won’t have to build up an entirely new work history.
Indeed, some lenders won’t require a borrower to wait to build back up their work history.
The main criteria for determining your loan application will be:
- How soon does the applicant believe they will return to work?
- Does the applicant have a temporary source of income?
- What is the size of the applicant’s down payment?
- How did the applicant manage their finances while unemployed?
- Is the applicant’s credit history good and free of late payments or delinquent loans?
Once a mortgage applicant gets back to work, there are several strategies they can employ to push through their application.
Buy a Home With a Co-Borrower or Co-Signer
One way to apply for a home loan after a period of unemployment is by having a co-borrower. The lender will evaluate the borrowers’:
- Credit score
- Income
- Debt-to-income ratio (DTI)
- Credit reports
- Assets
This type of arrangement can be helpful for anyone who is struggling to meet mortgage requirements. Additionally, a co-borrower may or may not live in the property.
Another option may be a co-signer. A co-signer is where the co-signer puts their name on a mortgage as a guarantee against the loan’s primary borrower missing payments.
Can I Qualify for a Mortgage Based on an Offer Letter?
Most lenders will accept the employment offer letter for laid-off applicants who received a job offer allowing applicants to close the loan before starting the job.
Employment offer letters are considered if they meet the following criteria:
- The job offer cannot have conditions or contingencies, such as being dependent on background or reference checks.
- The job should start within 90 days of the mortgage closing date.
- The letter must include a starting date, salary and be signed by both the employee and the employer.
- Applicants must provide evidence that the home will be their primary residence and is a single-family home, a townhome, condo, or Planned Unit Development.
- Applicants must show they have reserve funds to cover mortgage payments, property taxes, and homeowners insurance for the time between closing and the job start date, on top of an additional three months of reserves.
Conclusion
Down payment programs and low interest rates are making home buying more attractive for many Americans. However, the economic disruption of the last 18 months has affected many potential buyer’s jobs.
Thankfully, there are several options for applicants currently out of work and entering the job market.
Marimark Mortgage
Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in mortgages for first-time homebuyers, conventional home mortgages, refinance loans, reverse mortgages, and FHA, VA, and USDA mortgage options. In addition, we’ve worked extensively with cash-out refinancing and help clients lower their monthly mortgage payments.
To get started with a mortgage to buy your next home, please fill out our Quick Mortgage Application or contact us.

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