Buying Your First House When Your Income is Unpredictable
Bartenders, servers, and taxi drivers--where would we be without you? We know how hard you work and how difficult it can be to manage finances when your income in unpredictable. The good news is you don't need a typical 9-5 job to buy your first home.
Look for a lender who gets first-time buyers
Some lenders are more willing to work with than others and help you find the right type of loan. Shop around for a lender who understands your needs as a first-time home buyer. You might need some extra guidance choosing the right home loan or getting all the necessary documents together. You're also in a unique situation since your income is unpredictable and you don't already own a home, so you don't have any home equity available to you.
Prove the income you do have
Income might also mean something different to your lender than it does to you. If you're a military veteran with disability benefits, you're getting a social security check, or if you have child support payments coming each month, these all count as income.
There are also a good number of jobs, like servers or bartenders, that pay almost entirely in tips. If that's you and you aren't currently claiming that money as income on your taxes, you need to start. Like, yesterday. We know, we know. It's way more tempting to keep all that money under the table, but lenders are going to want to see those tax returns because reporting your tip income is the only way to verify that you have money coming in every month. Not to mention it's the law.
Save, save, save
When your income is unpredictable, your downpayment is going to be even more important. Saving a full 20% might seem a little scary, but there are a lot of expenses you can cut to help!
Consider a cosigner
If all else fails, consider asking someone to cosign the loan with you. It's a big ask, so make sure you ask someone who you trust and who trusts you. It's also a good idea to be ready to show your potential cosigner your financial plan for the house including your downpayment, your expected monthly mortgage payments, and your plan for making sure you can cover all your expenses each month.
Sure, you're going to need to put some work into getting your first mortgage loan. But it'll be worth it when you can have a place that's all your own.