The glum news stories seem endless…14,000 employees laid off from Amazon, 48,000 gone at UPS, and even with the government shutdown finally over, thousands of federal workers have been cut. The cruelest aspect is that so many of those folks who suddenly find themselves on unemployment were doing well at their jobs. What’s worse is that the bills still come calling each month.
It’s a scary time for homeowners with mortgages as well as homeowner hopefuls, with somewhere around a million jobs cut this year. AI poses yet another threat, as impressive tech advancements often result in hard-working Americans in differing fields suddenly finding themselves with the proverbial pink slips.
What and how are real estate agents telling buyer clients about finances when it comes to homes? Is it still strictly true that they must have rock-solid employment?
“There is no universal answer to whether it is possible to buy a house without working, after being laid off or as a 1099 employee,” says Jeffrey Decatur, a longtime broker associate with REMAX Capital in upstate New York. “Each one has its own hurdles, and as an agent, I would refer a buyer to a mortgage professional.
“I don’t know that you can buy a house without employment, but I have had clients who were laid off, or who have seasonal jobs, continue on with a purchase. With 1099 independent contractor types, I have seen them carry on with transactions. I had an underwater welder as a client once. He worked five to seven months a year and then was laid off. The bank took into account that his work was seasonal and verified he would be rehired.
“It’s a similar situation with teachers. Some spread their salary out over 12 months, while others take it while they are in session. The bank reviews the situation and verifies re-employment. As for 1099 employees like real estate agents, freelance writers or consultants, we don’t have the typical 40-hour work week. When I bought my house, the bank asked for my taxes from several years to show a track record. It is all situational.”
Donna Deaton, with REMAX Victory + Affiliates in Cincinnati, Ohio, sings the same song.
“Self-employed buyers purchase homes all the time,” she says. “You just need to show lenders that your income is consistent and reliable. Instead of pay stubs, you’ll use things like your tax returns, profit and loss statements and bank records. Having two solid years of self-employment income and good credit makes the process smoother. With the right guidance, lenders can see that your business success is just as dependable as any paycheck.”
Josh Jarboe, broker/owner of REMAX Empire Buyers in Kentucky, explains that freelancers and self-employed workers can qualify for mortgages as long as they have two recent years of tax returns filed.
“We can use specialized bank statement loan programs to verify income,” he says. “Instead of relying on pay stubs, we average deposits over the past 12 to 24 months and base their approval amounts on the three lowest-income months to keep things realistic and responsible. Credit score and debt-to-income ratios still play key roles, but these loan products are designed to make homeownership possible for those who are 1099ers, entrepreneurs and others who don’t fit the traditional employment model.”
Tali Berzak, an associate broker with Compass in Brooklyn, New York, advises new buyer clients to take stock of their employment status before beginning the home-search process. Wasting a lot of time, both theirs and hers, can be avoided with an understanding of the major financing needed for new homeownership.
“The quick answer to whether one can buy a home without a job when financing is generally no,” she says. “The key lies in the mechanics of the mortgage process. While securing a bank’s commitment letter is a milestone, it is not the end of the line. Lenders are required to fulfill the commitments of that letter, which almost always includes conducting a final employment verification, sometimes just one or two weeks prior to closing.
“A buyer must be actively receiving a paycheck at that time. If a job loss occurs at the beginning of the home search, the most responsible advice is to avoid making an offer entirely. If there is a brief gap in employment, the bank may be amenable only if the buyer can provide a commitment letter for a new job starting shortly after closing.”
Berzak adds that for the many freelancers, artists and consultants prevalent in markets like hers, the issue pivots from stability to verifiable history. When a history of self-employed tax returns is unavailable, or a high-asset buyer has an atypical income stream, there are alternative lending options.
“These include stated income or bank statement loans, which qualify a buyer based on the income coming into their accounts rather than W2s or paystubs,” she says. “Institutions view these clients’ assets and consistent cash flow as collateral, and these typically come with a higher interest rate than conventional financing.”
Co-buying plusses and minuses
One strategy buyers may employ when worried about employment is co-buying, wherein two parties purchase a property together. If one person loses their job, the other can cover the mortgage payments in the meantime.
The downside is the eventual possibility of a partition suit, a legal procedure by which co-owners of real estate can end their shared ownership, usually resulting in a court ordering the property to be either physically divided or sold, and the proceeds distributed among the owners.
Elijah Underwood, a legal expert at Underwood Law in California, explains the trend and what potential co-owners should know before buying property together.
“Co-ownership can be a smart way to enter high-priced housing markets, but it comes with legal risks if agreements aren’t formalized,” he says. “Our firm has seen a sharp rise in partition suits over the past 12-18 months, often stemming from relationships breaking down, disagreements over maintenance costs or financial strain. Many co-owners assume verbal agreements or trust will suffice, but when conflicts arise, courts step in, and litigation can be lengthy, costly and stressful.”
Underwood notes that if a partition lawsuit is filed, a court can order the property sold with proceeds divided, or sometimes allocate specific portions to co-owners. Legal fees, appraisal costs and court expenses can easily exceed $15,000-$30,000, depending on property value and complexity. Early planning is key, with a written co-ownership agreement detailing financial contributions, responsibilities and exit strategies to prevent disputes entirely.
Pam Rosser Thistle, with Berkshire Hathaway HomeServices Fox & Roach, REALTORS® in Philadelphia, offers the easiest ways to buy a home.
“If they’re a cash buyer with sufficient funds of their own, or someone else like a parent who is funding them, then yes, they can buy a house without a job,” she says.
Decatur does not give up on a client who has lost their job and cannot continue with the home-search process, since there is every likelihood of the situation changing for the better.
“I live in an area where some big employers will lay off a whole department, and it is chaos for the families affected until they find employment again,” he says. “As for continuing to work with someone in a sticky situation, absolutely! We may have to change our plan, but I would still help in any way I could.
“With some of the larger employers here, you could be unemployed today and hired at a competitor a month from now. I have seen several agents lose clients because they ghost folks going through a challenging time. Then when times are good, the client remembers those who were compassionate and understanding.”
