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Mortgage  Question?
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Qualify For Mortgage Work Contract Jobs But Unemployed?

Can you qualify for a mortgage if you work contract jobs but you are currently in between jobs and unemployed? I make a good living doing multiple-month contract work and also receive unemployment income when I am in between jobs. I have a high credit score and savings for a 20% down payment but can I qualify for a mortgage if I'm currently unemployed?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

It is highly challenging to qualify for a standard mortgage if you are unemployed. This is because lenders typically require that applicants have a two year continuous employment history and lenders do not consider unemployment income when you apply for a mortgage.  We provide a comprehensive overview of the employment history requirement for a mortgage on FREEandCLEAR for you to review.

The ultimate answer to your question of if you can qualify for a mortgage depends on your work and income history over the past three-plus years. If you have earned approximately same amount of money over the past three years, a lender may average your income over that time period to determine your ability to qualify for a mortgage, even if your income is interrupted by periods of unemployment. For example, if you earned $80,000 in non-unemployment income in each of the past three years, a lender may give you credit for $80,000 in annual income or $6,666 in monthly income when you apply for a mortgage. Given your strong credit score, savings and 20%+ down payment, a lender may be willing to work with you if your annual income is consistent.

I recommend that you contact multiple lenders to understand how they would handle your unique situation. Gather your financial documents for the past three years including any tax returns, W-2 or 1099 forms, pay stubs and bank statements.  Your next step is to review that information with multiple lenders to understand if it is possible for you to qualify for a mortgage and what size loan you can afford as lenders may not give you full credit for your annual income.  Please note that it is best to have these lender conversations when you are currently employed.

You can review lenders in your area by clicking INTEREST RATES We advise you to contact at least four lenders as your situation is relatively unusual and qualification guidelines vary. Plus, shopping multiple lenders is the best way to save money on your mortgage.

If you are unable to qualify for a standard mortgage program you may want to consider a stated income program.  A stated income mortgage does not require borrowers to provide personal financial documents such as W-2s and pay stubs to verify their income.  Instead of requiring these standard income verification documents, the lender may require that you provide 12-to-24 months of bank statements to verify your income.  Lenders may also request to review a transcript of your tax returns for the prior two years.  We provide an explanation of stated income mortgages on FREEandCLEAR.  You can use our FREEandCLEAR Lender Directory, which allows you to search for lenders by state, lender type and loan program to find lenders that offer stated income mortgages. For example, you can search for lenders in your state that offer Stated Income / Bank Statement mortgage programs.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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