Ask an Agent: Can I Get a Home Loan With a Large Nest Egg, But No Income?

• October 14th 2009

by Mark Wellborn

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In this week's installment of Ask An Agent, a reader who does not currently have any regular income, but has a very large nest egg wonders about what his chances are of being able to secure a loan. Coldwell Banker's David Bediz offers up some insight.

Question: I am shopping for a new condo in the $350-450K range and I am trying to understand my chances for getting a mortgage. My financial situation is that I have saved a nest egg of about 50 percent of the purchase price ($250K), but I am currently unemployed and have no income. Because of my large savings, I could afford to put down 20 percent and still have plenty left over to pay my mortgage for literally years, even if I remain unemployed (not that I intend to). My question is: What are my chances of getting a mortgage considering that I am "cash rich but income poor?"

Answer: Unfortunately, the general answer is pretty short, but not so sweet: No loan for you! Until you are a salaried employee or have two years of proven income as an independent contractor, you will not be able to secure a loan with most lenders. If you cosign, however, you will be able to buy the property, but your cosigner would then be a co-owner as well (and some lenders require the co-borrower (you) to have some income as well). The only exception is for retired individuals receiving Social Security benefits who may then qualify for a loan using their retirement fund assets that may be depleted over time.

All that said, you may get lucky with smaller, more specialized banks that have programs that don't require Fannie/Freddie conformance (and may thus be willing to take on a loan like this). Their rates are not bad, but they will likely be higher than normal and may have other stringent stipulations. Your best bet is to talk with an experienced agent with a lot of lenders in their Rolodex (oops, I mean Blackberry... this is 2009 after all!) or to just pick up the phone and call as many lenders as you can until you find one that can do it and won't take your first-born in return.

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This article originally published at https://dc.urbanturf.com/articles/blog/ask_an_agent_can_i_get_a_home_loan_with_a_large_nest_egg_but_no_income/1409.