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How to Get a Mortgage Without a Full-Time Job

by Don Rafner

Before approving you for a mortgage loan, lenders want to make sure that you can afford your monthly mortgage payments. This means that they'll take a close look at your gross monthly income and your total monthly debts. Earning the right debt-to-income ratio without a full-time job might be a struggle. But if your total monthly income is high enough even without such a job, you should be able to qualify for a mortgage.

Determine your total gross monthly income -- your income before taxes are deducted -- and your total monthly debts. Income doesn't have to come from a full-time job. Lenders consider several types of monthly income streams when determining if you can afford a monthly mortgage payment, such as monthly rental income, alimony payments, Social Security payments, payments that you receive from a legal settlement, money you earn from royalties and any income you generate from a part-time job. Your total monthly debts can include your minimum monthly credit card payments, car loan payments and student loan payments. Lenders will also count your estimated new mortgage payments as one of your monthly debts. Your lender will compile this information on its own when you officially apply for your mortgage loan. But by doing this assessment before applying, you'll have a better idea of where you stand financially.

Calculate your back-end debt-to-income ratio. This ratio compares your total monthly debt with your gross monthly income. Make sure to include an estimated mortgage payment as part of your monthly debt. For example, if your total monthly debt -- including that estimate mortgage payment -- equal $1,500 and your gross monthly income, even without a full-time job, is $5,500, your back-end debt-to-income ratio is 27 percent. Lenders typically want to work with borrowers whose back-end debt ratio is less than 36 percent of their gross monthly income. A debt-to-income ratio under that level will make you a solid candidate for a mortgage loan even if you don't hold a full-time job.

Improve your back-end debt-to-income ratio if it is too high. You can do this by either increasing your gross monthly income, perhaps by taking on another part-time job or renting out a spare room in your home, or by reducing your monthly debt. You can do the latter by paying down your credit card debt, selling a new car and replacing it with a used one that doesn't come with monthly payments or by paying off your student loans.

Pay your bills on time and refrain from running up large amounts of credit card bills to maintain a high credit score. Lenders don't just consider your debt-to-income ratio when considering your loan application. They also rely heavily on your three-digit credit score, which tells lenders if you've managed your debt payments properly in the past. If your score is high, lenders will be more willing to consider you for a mortgage even if you don't have a full-time job.

Consider asking a family member to cosign on your mortgage loan. This reduces the lender's risk because if you fail to make your mortgage payments, your cosigner will be responsible for making them. Make sure, though, that your cosigner understands the financial responsibility of signing along with you on the mortgage loan.

About the Author

Don Rafner has been writing professionally since 1992, with work published in "The Washington Post," "Chicago Tribune," "Phoenix Magazine" and several trade magazines. He is also the managing editor of "Midwest Real Estate News." He specializes in writing about mortgage lending, personal finance, business and real-estate topics. He holds a Bachelor of Arts in journalism from the University of Illinois.