My father owns a house worth approximately $300k and is moving out of the country. He wants to sell it to me for $100k, so I need a mortgage for $100k.
I work on commission and made $95k last year. However, I’ve only been at this job for one year.
I tried getting a mortgage through my local credit union, where I bank, but they said I need to be at my current job for two years to qualify.
I thought this would be easy since the house is worth $300k, and I’m only asking for $100k. I have good income and solid credit history, but no one will touch me. What can I do?
Using commission income to qualify for a mortgage typically requires at least two years of history. Do you have any base salary, or is it 100% commission? If you do have a base salary, you might be able to qualify on that. Also, have you worked in the same industry before this job?
How long have you been in the sales industry? Did you switch from a similar job to your current one? Lenders often consider income continuity if you stayed in the same field.
You could do a rent-to-own arrangement. Offer to pay your father monthly until you’ve met the two-year employment requirement. When did you start your current job, and have you filed taxes yet?
Try a mortgage broker instead of a bank. Brokers work with multiple lenders and might find one willing to approve you with a 33% loan-to-value ratio, provided you don’t have significant other debt.
Lenders don’t require two years at the same job, but they usually require two years in the same line of work. Have you been in the same industry longer? If not, consider renting the home from your father for a year and then applying for a mortgage.
Look into a non-QM loan. These loans are more flexible about employment history and income documentation. Rates might be slightly higher, but with a $100k loan, the difference in monthly payments will be minimal. After a year or so, you could refinance into a conventional loan.
Have your dad sell it to you at $300k and provide a gift of equity for $200k. That way, you’ll only need a $100k mortgage, but the higher sales price keeps neighborhood comps intact and avoids issues with low valuations.
If your father doesn’t need the money upfront, consider making monthly payments directly to him as a private loan agreement. This could work until you qualify for a mortgage later.
If your dad is okay with it, you could structure the deal as owner financing. You’d pay him directly over time, and when you meet the qualifications, you could refinance into a conventional mortgage.
Why not have your father finance it himself? You’d essentially pay him monthly as though he were the bank. Once you meet mortgage qualifications, you could refinance with a lender and pay him off.
If you’re in California, you might find lenders who specialize in non-QM loans or portfolio loans. These options often don’t require two years of employment history for approval.
Talk to a seasoned mortgage broker who specializes in unique situations like yours. They may find a lender that accepts shorter job history if your credit and income are solid.
Some lenders might accept one year of job history if you’ve been in the same industry. I got approved for my mortgage that way after just a year at my current job.