Core Insights - The article discusses the possibility of obtaining a home loan without traditional employment, emphasizing that while job security is important, lenders can consider alternative income sources and financial stability [1][24]. Group 1: Employment and Income Sources - Employment is not the sole factor for mortgage qualification; lenders focus on the ability to repay, which can include various income sources such as Social Security, military retirement benefits, and pensions [2][4]. - Alternative income sources that can be considered include Social Security, disability benefits, veteran retirement pay, and long-term rental income, provided they are well-documented and expected to continue for at least three years [7][19]. - Cash reserves, such as savings and investment accounts, can significantly enhance a borrower's profile, reducing lender risk in the absence of job-related income [9]. Group 2: Credit Profile and Co-Borrowers - A strong credit profile is crucial; a "very good" credit score ranges from 740 to 799, and lenders prefer a debt-to-income (DTI) ratio of 36% or less [10]. - Including a co-borrower with a stable income can strengthen the mortgage application and improve loan terms, as both parties share responsibility for repayment [11][20]. Group 3: Strategies for Homebuyers - Homebuyers can qualify based on assets by converting savings or investments into an income equivalent, which is particularly useful for retirees or those between jobs [17][18]. - Making a larger down payment can lower the amount financed, reducing lender risk and potentially leading to loan approval even in uncertain employment situations [21]. - Delaying closing strategically can be beneficial if a job offer is imminent or if a furlough is expected to end soon, allowing lenders to finalize approval based on new income documentation [22]. Group 4: Special Considerations - Furloughed federal employees remain officially employed, which may facilitate the verification of employment during the mortgage process [23]. - If a borrower loses their job during the mortgage process, lenders typically re-verify employment before closing, which may lead to delays or denial unless alternative income sources are established [16][27].

When you apply for a mortgage, one way your lender will assess your financial capacity to afford your loan is to calculate your debt-to-income ratio (DTI). Your DTI ratio compares your total gross monthly income to your total monthly debt payments. Different mortgage lenders and loan programs have varying DTI ratio requirements. Learn more: How much house can you afford? Use our home affordability calculator. What is debt-to-income ratio? The term "DTI" can be confusing because most borrowers have two ...