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Does unemployment count as income when applying for a mortgage?

Hi. I hope someone can give me some advice. DH and i want to purchase our first home. We are in NJ. We have very good credit, his is like 806. Mine is also high. We have a pretty large down-payment of $60,000. Looking to purchase a one family or a two family around $250,000 - $300,000. We went to see Coldwell banker because a friend of DH's wife works there. We viewed some homes, etc. Today the finance department called and said we would not qualify because i am not working. I am receiving unemployment right now. I have 6 more months on it, if i don't find work. DH is working full-time and makes about $38,000 on the books. He also does mechanic work on the side, but that is not on the books. So my question is, could this be correct that we don't qualify even with a great credit score, large down payment, and steady work history for him? He has been with the same employer 25 years. Thank you so much.

 
WifeyandMom71

Asked by WifeyandMom71 at 8:38 PM on Aug. 5, 2013 in Money & Work

Level 12 (749 Credits)
This question is closed.
Answers (9)
  • Basic rule of thumb is not to purchase a house that is more than 3 times your gross annual salary. That means for YOU based on your Hubby's income of $38,000 you can afford a house that costs $114,000. If you add in the amount you plan to put down for a down payment you could possibly increase to $150,000 but I wouldn't go beyond that.

    KristiS11384

    Answer by KristiS11384 at 8:52 PM on Aug. 5, 2013

  • Don't qualify for the loan amount requested? Yes unemployment would affect that and it does not count as income. For unemployment to count it would have to be a continuous income for 3 years + and since unemployment is typically only used for 6 months to a year it does not count as "income".
    Even with a large down payment you are still looking at a house in the $190,000 range and his income which means you are unlikely to qualify for anything over $100,000
    KristiS11384

    Answer by KristiS11384 at 8:44 PM on Aug. 5, 2013

  • Yes, because it isn't considered permanent income. So they wouldn't include it, they'd only use your husband's income which would maybe be too low for a mortgage.

    I only know this because my daughter's income from her internship was not included when she and her SO were buying a home
    Mrs_Prissy

    Answer by Mrs_Prissy at 8:40 PM on Aug. 5, 2013

  • Yes, unemployment does not give the bank any stable income for you. So you get it for a few more months, what happens if you don't get work after that ? You would be better off getting a job right now. The sooner you get employment, the sooner you can qualify for a home. Good Luck.
    LeJane

    Answer by LeJane at 8:46 PM on Aug. 5, 2013

  • No unemployment is not a job or steady income. As you have just stated, the it maxes out in 6 months. So then what is the mortgage going to be paid with? This is what they are looking at. In 6 months there is no income from you because you are not working.
    Dardenella

    Answer by Dardenella at 8:59 PM on Aug. 5, 2013

  • Thanks so much everyone!
    WifeyandMom71

    Comment by WifeyandMom71 (original poster) at 9:09 PM on Aug. 5, 2013

  • yeah- they are not gonna count unemployment
    charlotsomtimes

    Answer by charlotsomtimes at 9:33 PM on Aug. 5, 2013

  • Unemployment is not permanent, so it doesn't count. Plus, being on unemployment shows you are not currently employed, and since they have no way of knowing if/when you will find employment, they can only use his income.

    The best thing you can do is either wait until you find work, or see if you qualify for a smaller loan and find a cheaper/smaller place. Personally, I'd wait till you find work.
    wendythewriter

    Answer by wendythewriter at 8:23 AM on Aug. 6, 2013

  • It is temporary so no, and the amount is not that much.
    by2013

    Answer by by2013 at 5:09 PM on Aug. 8, 2013

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