Buying a home is a dream for many people, but it can be especially challenging for those who don’t have a traditional income. This can be a common occurrence for consultants working in the DMV who are not salaried and are free-lance. In Alexandria, where the real estate market is competitive, buying a home without a traditional income can sometimes be daunting. However, there are ways to successfully purchase a home in Alexandria even without a typical income, if you have the right advisors. Read on for our best tips to help you achieve your goal!
Build a strong credit score:
Your credit score is one of the most critical factors in determining your ability to secure a home loan. As a consultant or anyone with a non-traditional income, you’ll need to have a strong credit score to convince lenders that you are a safe bet. If you have a history of making timely payments on your debts and bills, this will go a long way in improving your credit score. You can also take steps such as paying down debt, disputing any errors on your credit report, and keeping your credit utilization low.
Save for a down payment:
In addition to having a strong credit score, you’ll also need to save for a down payment. While traditional home buyers typically put down 20% of the purchase price, there are options available for those with less to put down. Some lenders will accept a down payment as low as 3%. Keep in mind that the less you put down, the more you’ll pay in interest over the life of your loan, so it’s important to strike a balance. The more you put down, the less you will have the “qualify” for, which can be a good thing for those without a traditional income.
Are you looking for more homebuying advice? Read these posts next:
- Buying a New Construction Vs. a Resale Home
- The Pros and Cons of Assumable Loans
- Are Homes in Alexandria Affordable?
Look into alternative lending options:
There are alternative lending options available for those with non-traditional income. For example, some lenders may be willing to consider your bank statements or tax returns as proof of income. Others may be willing to offer a loan based on your assets, such as stocks or retirement accounts. It’s worth exploring these options to see if they’re a good fit for your situation.
Be prepared to show proof of income:
While you may not have a traditional income, you’ll still need to show proof of income to lenders. This can include bank statements, tax returns, or other financial records. Be prepared to provide documentation that shows your income over the past few years and demonstrates your ability to make your mortgage payments. It’s important to note that with almost all cases of non-W2 income (self-employed, 1099 contractor, someone in sales and paid commissions, etc.) your lender will need to see a full two year history of income on tax returns.
Who doesn’t want a lower mortgage payment? Discover the top questions to ask your lender for a lower mortgage payment. Read the post here.
Consider a co-signer:
If you’re unable to qualify for a home loan on your own, you may want to consider bringing on a co-signer. A co-signer is someone who agrees to take responsibility for the loan if you’re unable to pay it. This can help lenders feel more secure in lending to you, as they know that someone else will be on the hook if you default on your loan.
Buying a home in Alexandria without a traditional income can be challenging, but it’s not impossible. By building a strong credit score, saving for a down payment, looking into alternative lending options, being prepared to show proof of income, working with a knowledgeable Realtor and considering a co-signer you can increase your chances of securing a home loan and achieving your dream of homeownership.
If you’re looking to buy in Alexandria, but you’re unsure where to start, let us help! It’s never too early to start looking, and if you don’t have a traditional income the earlier you can start preparing to buy the better.