Are you a homeowner looking to get a mortgage with a non-traditional income source? It can certainly be done, but it takes some smart financial behavior and savvy to make sure you get the best deal. Here’s what you need to know.
The first thing you should understand is that lenders are not all created equal. Some may be more willing to work with an alternative income source than others, so it’s important to shop around and compare offers. You’ll want an experienced loan officer who understands your unique situation and can help guide you through the process.
When it comes to getting a mortgage with a non-traditional income source, your credit score is critical. Lenders look at credit scores as one of the main factors in determining whether or not to approve your loan application. The higher your credit score, the better chance you have of getting approved for a loan. So before you even start looking for loans, make sure that your credit score is in good shape by paying off any outstanding debts, making timely payments on existing loans, and avoiding taking out too much new debt.
Another important factor that lenders look at is your debt-to-income ratio (DTI). This ratio measures how much of your monthly income goes toward paying off debts like mortgages and car loans. A DTI of 43% or less is ideal when applying for a mortgage with an unconventional income source, so try to pay off any existing debts as quickly as possible before applying for a loan. If you have high incomes, then this may not be an issue since lenders will factor in additional income when assessing applications from higher earners.
Finally, make sure that if you have access to savings or investments that can be used as collateral for the loan, take advantage of them! Collateral helps reduce risk for lenders, making them more likely to approve your application regardless of the type of income you provide. You may also be able to negotiate better terms on interest rates and repayment periods if you have something substantial to offer up as collateral for the loan.
Getting a mortgage with a non-traditional income source can certainly be done – it just takes some smart financial behavior and savvy! Make sure that your credit score is in good shape by paying off any outstanding debts; maintain a low debt-to-income ratio; and use savings or investments as collateral if possible. With these tips in mind, you’ll be well on your way towards securing the best possible deal when it comes time to apply for a mortgage!