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How to Get a Mortgage Without a Standard Source of Income

You may be retired, not working or self-employed and looking for a new mortgage. When it comes time to purchase a home or refinance your existing mortgage, it can be difficult to prove you have a steady stream of income from which to make mortgage payments if you don’t have a regular paycheck from an employer.

Fortunately, there are ways to secure a mortgage without having W-2 income. Certain lenders, especially non-bank lenders or mortgage brokers, may offer different products to borrowers who don’t have a W-2. While usually these mortgages are smaller in size and may come with a higher interest rate than a conforming bank loan, they present options to borrowers who wouldn’t otherwise qualify for a regular mortgage.

Lenders will want to see certain documents to aid your mortgage applications. Let’s take a closer look at a few of these documents.

  • Your tax returns – Your tax returns are very revealing as to consistency and source of income. You may be able to use your tax returns as documentation if you can prove at least two years of qualifying income.
  • Use your business documents – If your business generates a profit, your bank may accept business documents as proof that you have access to income. Common documents include your business license, profit and loss statements, balance sheets, receivables and possibly even client references. Your business tax returns will be instrumental in demonstrating income over the past several years. If you have a lot of income that is retained, that income could be considered if you are at least a 25% owner.
  • Provide bank statements – There are certain mortgage programs that accept bank statements as documentation of income. This can be a solution for business owners who take draws from the business (instead of a paycheck) and can document a history of deposits.
  • Document your assets – Some lenders offer asset-based mortgages, also called asset depletion loans, which use your liquid assets to assign an annual income. Different loan programs will carry varying guidelines around the calculation for depleting the asset base. Check with your lender to determine what your options are. Most lenders use a 15-year depletion schedule. For example, if you have $2 million in assets and are applying for a 15-year fixed mortgage, the lender may view this as an annual income of $133,333 per year ($2,000,000/15).