Refinancing A Mortgage Without A Job Is Almost Impossible: Three Potential Solutions

Refinancing a mortgage without a job is brutally difficult. Once you lose your stable W2 income, you become dead to banks. Please refinance your mortgage before quitting or negotiating a severance please!

Once you leave your day job, you become dead to banks. Lenders need to see at least two years of qualified income to even consider lending to you.

I've been fortunate over the past 20 years to refinance multiple properties, multiple times. Economic Armageddon and easy monetary policy by the Fed is literally saving me hundreds of thousands of dollars in interest expense.

To experience a recovery in stocks and real estate while also being able to lower my mortgage is amazing. However, things are much dicier now. Let me share a mortgage refinance experience without a job several years ago. I'll teach you how to refinance a mortgage without a job.

The Journey To Refinance A Mortgage Without A Job

One year, my Citimortgage officer cold called me asking whether I'd like to refinance my 5/1 jumbo ARM down to 2.375%. Banks were giving up more margins to win business as competition heats up.

The move from my original 2.625% rat down to 2.375% was only a 0.25% decrease. Normally I wouldn't waste my time for anything less than a 0.5% reduction. However, Citibank was offering to pay for all closing costs so I figured why not.

I've been through this song and dance so many times I'm willing to bear potentially 100 days of frustration to save some money. Refi as many times as possible. As an unemployed person, every dollar counts!

Refinancing A Mortgage With A Job Is Extremely Difficult

The aggressive Citibank cold caller turned out not to be a mortgage officer as he indicated, but a mortgage officer assistant. Being misled was the first sign I should have been wary.

The assistant spent about 10 minutes pitching to me why I should refinance with them as I scrubbed myself with bubbles in the tub ignoring everything he was saying. Of course I want to refinance for free.Sign me up. When is your mortgage officer available to speak?” I responded after his speech.

How about sometime Friday morning?” the assistant asked.

Sounds good. Let me know when on Friday and I'll make time.” I responded.

The assistant said he'd get back to me the next day (Thursday) with a time and we left it at that. At 4:55pm on Thursday I shot the assistant an e-mail because he still had not confirmed a time. He finally responded with a time of 10:30am Friday morning and I confirmed. During this conversation I told him I no longer had any W2 income. He said that's fine and that he'll get the mortgage officer to walk through different scenarios.

Come 10:30am on Friday morning I receive no call. Disappointing.

At 12noon I shoot the assistant an e-mail asking him to, “Call any time. Your guy is 1.5 hours late, but I will wait until eternity for his call.” I was pissed. I absolutely hate late people who don't provide legit excuses. If you are going to cold call me with some offer, you better follow up and execute on your offer and not waste my time!

At 3pm, four and a half hours after the Citibank mortgage officer was supposed to call, I e-mailed the assistant a final disapproving follow up. Again, no response.

Mortgage Officer Ghosting Me

It's been a week now and still NO RESPONSE. The assistant completely ignored me after first reaching out and setting up the call. Do you know why? It's because when we confirmed the call on Thursday, I told him that I no longer have a paycheck. He and his mortgage officer at Citibank decided that I was not worth their time, even though they were the ones who reached out to me first.

I finally got a hold of him today and ripped him a new one. To be successful in business, you've got to look past the short term hurdles and build long term relationships. Such relationships blossom into potentially new opportunities over time.

Your long term relationships also tend to offer referrals for more business. He apologized and asked if we could try again, but I shut him down. I kept imagining how many more unpleasant encounters I'd gave with him over a 100 day mortgage refinance process and shuddered.

A Final Solution For Refinancing A Mortgage Without A Job

I ended up reaching out to my personal banker to follow up with another Citibank mortgage officer about this deal. This person followed up, checked my documents, looked up my credit score and my payment profile. The result? No refinance for me.

Without a W2 income, it doesn't matter whether I have more liquid assets in the bank than the size of my mortgage, my monthly debt payment to income ratio was over 40%.

Citibank and other banks have a strict 40-45% D/E ratio that cannot be crossed nowadays. In the good old days you'd have folks coming in with stated income to allow them to borrow. In the new environment, banks check everything down to the last penny.

The interesting thing is that 44% of my mortgage payment is principal, but the bank still included my total payment (along with property tax and everything else) as part of my debt rather than just the interest portion.

Given I had low expectations, I wasn't disappointed because I know the unemployed are dead to banks. I also didn't want to potentially go through a 100 day mortgage refinance ordeal again like I did last Spring for 0.25%.

It sucks not to be able to save additional money, but what can I do except go back to work? In fact, that's exactly what my mortgage officer somewhay smugly told me.

Sorry we cannot go through with the refinance. Thanks Sam for your understanding! I'm sure we're hiring. Check our career section, I'll put a good word in for you.” said the mortgage officer.

What a nice guy. Perhaps going through one's mortgage broker is a way to get a job at a bank!

How To Refinance A Mortgage Without A Job

1) Asset based mortgage refinance. If you do not have W2 income, banks may be able to do an asset based mortgage refinance. Let's say billionaire Mark Zuckerberg retired, sold all his stock, and has zero income streams. A bank would figure out what level of assets they are comfortable with to allow for a mortgage refinance.

The problem with asset based mortgage refinances is that they are very rare and there is no standard for how much in assets a borrower needs to qualify. It's up to you to ask for specifics. Also remember that if you have a jumbo loan, your bank likely still owns the loan as opposed to selling it off in the secondary market. When a bank owns a loan it has more flexibility to alter the terms.

2) Invite a loved one. If your income doesn't qualify, you can invite a loved one to co-borrow with you to improve your debt to income ratio. Unless someone really loves you back and is utilizing the property, you are unlikely to convince anybody to share a mortgage loan with you, especially if the person doesn't get added to the title.

However, this strategy is useful for couples who get married where one spouse has a preexisting home, wishes to refinance, but can't qualify on his/her own for whatever reason. This is a chance to join financial forces to save money on mortgage interest and a whole lot of other things. Just don't split up OK?

3) Utilize the internet. The internet has allowed for lenders to compete to offer the lowest rates. You can go through a mortgage broker or you can check the latest mortgage rates online for free.

I always check online before and after I get solicited by a bricks and mortar bank to make sure they are indeed giving me the lowest rate at the time. It's like checking for the lowest price after you see something you like at the store. It's a no brainer.

Refinance BEFORE You Quit Your Job

Now that you know refinancing a mortgage without a job is almost impossible, everyone needs to refinance their mortgage before they quit their jobs or retire.

If you have no job, you're really only left with the three options above. The obvious fourth option is to get a job at least temporarily so you can refinance your mortgage. But who wants to work when we've got the magnanimous support of our government anyway?

I'm now more motivated than ever to improve my passive income streams in order to qualify for a mortgage refinance without having to work. My biggest fear is that by the time I'm able to earn enough passive income, interest rates will have already moved higher!

Invest In Real Estate More Strategically

Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income. Stocks are fine, but stock yields are low and stocks are much more volatile. 

The combination of rising rents and rising real estate prices builds tremendous wealth over the long term. Meanwhile, there are more ways to invest in areas of the country where valuations are lower and net rental yields are higher thanks to crowdfunding. 

Take a look at my two favorite real estate crowdfunding platforms that are free to sign up and explore:

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. The real estate platform has over 300,000 investors and manages over $3 billion. 

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends.

Real Estate Crowdfunding Dashboard

I've personally invested $810,000 in real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America. My real estate investments account for roughly 50% of my current passive income of ~$300,000. I've received roughly $500,000 in distributions so far.

About The Author

35 thoughts on “Refinancing A Mortgage Without A Job Is Almost Impossible: Three Potential Solutions”

  1. Hi.

    I am wondering if I can refinance my home loan.

    My wife passed away at in 2018. She was the breadwinner before she was diagnosed in 2006.
    I was terminated from my job of 17 years a little less than a year of my wife’s death in 2019.

    I am unemployed since. I freelanced but not at a level of being employed. I foresee running out of cash savings in a year or less, now. I do have a retirement portfolio but I’m still in my 50s.

    Can I refinance?


  2. I left my corporate job for a more lucrative 1 year contract with a startup. Yes, I was sort of shocked my bank would not refinance me despite making more money. The house is now a rental property as I moved for new job. In addition, my first house is paid off in full and I have assets double the size of my current mortgage balance and excellent credit.

    Any suggestions to refi? My bank told me I needed 2 years of work documentation since I am now a freelancer before they would even talk to me. My rate is 4.5% but would like to get it down to 3.5% to improve cash flow on rental property.

  3. Wendy Dickson

    I need advice. We have a rental property that we were able to build and finance in 2006 when they were giving away money to anyone with a good credit rating no matter how high the dbt to income ratio. The original loan was a super jumbo 5 yr option arm as a 2nd home (not a rental yet). Fortunately we had positive income as a vacation rental right away and now 12 years of gross income that exceeds the mortgage payments, insurance and tax expense by almost double. Even after the 5yr option ended and we went to a monthly variable rate, we benefitted from lowest index interest rates. We wanted to refinance to a fixed rate years ago, but were prevented from doing so because of changing requirements after the recession. And as a rental it is now an “income property” requiring much higher equity which the recession had depressed.

    Now we are semi-retired temporarily living off my husbands portfolio investments so we have no w2 income. Our home continues to bring in substantial gross income, almost double mortgage, tax and insurance expense, but we still have a slight loss on our taxes due to depreciation and other rental expenses. The value of our home has finally gone up enough to show enough equity for income property financing, but our variable interest rate is also higher and rising quickly with substantially increases the monthly mortgage payments for a super jumbo loan.

    We have never missed a payment. We have great credit scores. My husband’s assets exceed our debt, but without w2 income, do we have any way of refinancing to a fixed rate on a super jumbo mortgage on an income property?

  4. Wish I had stumbled on this a month ago – would have been able to refi at lower rate / better terms. Now, I am stuck – just got the axe.

  5. I have been in the same boat for a couple years now. Any idea how long one would have to flip burgers to begin to qualify for a refi?

  6. Hey Sam, you are totally right. Heck, it’s hard enough to refi WITH a job and high income if your DTI is whacked out a bit. Luckily I refinanced recently, right before I am “getting laid” next month. Thanks as always for the great advice, man!

  7. The First Million is the Hardest

    I understand banks being really strict in this new environment, but it seems pretty near sighted to look past someone based on one metric of evaluating a client. Especially seeing as you have considerable other business with Citibank as I think you’ve mentioned in the past. Giving you the .25% on the mortgage seems like a small price to pay if it means keeping/growing your business with them in other areas IMO.

    1. True. It’s just the way of the new mortgage refinancing regime nowadays. If I was offered a 0.5% or 0.75% reduction and then got ignored, I would be aggressively going after Citibank and asking them to honor their proposal. But at 0.25%, and a potential 100 day mortgage refinance process, I figured meh. I just think this is a good story to help others who are not employed as well who want to refinance or who are thinking of refinancing.

  8. Kevin @ RewardBoost

    Refinancing before you leave your job is a great idea. It’s one of those things that people usually don’t think about, but definitely makes a lot of sense.

    I’m sitting at 3.625 right now because I had the bank pay for all of my closing costs. My credit isn’t fantastic because I just started the mortgage, but I wonder if I could try to lower that rate in the next few months.

    1. Kevin, are you a young man hence your “credit isn’t fantastic” comment? Or did something happen? 3.625% is not bad, but for WHAT type of duration are we talking? I also respond to your comment about passive income in my net worth for above average married couples post fyi.

  9. Got to keep shopping around on the Internet. I think online mortgage companies are really starting to take market share away from bricks and mortar due to their more streamlined process.

  10. Last month someone at my old job as terminated on a Friday and on that Tuesday I got a call to verify employment. I knew that this person had been working on refi for about 2 months. Had I said “no” the deal would have died even though this individual was entitled to 2 additional paychecks. I was nice and said “yes” instead then called to let the person know what I had done. The person sent hand written “thank you” note because the refi would save hundreds per month at a time when it was needed.

    If you’re self-employed banks have been asking for 5 years of tax records. If you work for someone else they ask for a maximum of 2 years.

  11. I wouldn’t qualify for another ReFi without my wife working. Only reason we got this one was because it was an FHA Streamline. Wouldn’t have been able to do any other type with my current income. Bummer about the “No W-2, No loan for you” deal. Did you refer them to your blog about your passive income sources? I mean really!

    Maybe you could get a part-time job at Starbucks. Heck, you even qualify for benefits ;)

  12. We have refinanced our homes and rental several times now but not without W2 income. I used Quicken once and they were amazing. This last time, I refinanced my home with Amerisave and working with them was very frustrating. They did offer a no cost refinance but dealing with them was a giant pain in the ass! Refinancing is a huge pain but I like saving money =0

      1. We just refi’d and it was awesome. Quicken wanted too many points up front, so instead of negotiating with a (friendly but annoyingly persistent) salesman, I went to my credit union.
        I replaced my 20 year (with ~18 left after some prepay. We bought last year) with a 15 year and dropped a point. Over the lifetime of the loan we save 30k or more. If it’s not worth 1 month of annoyance for thirty thousand dollars, you must already be rich!

  13. About 13 years ago, I took out an original mortgage when I bought my current townhouse. I was a consultant working for myself and was able to get a good rate without income verification. I think things were loser then. I used my line of credit to make the down payment too.

    I do not plan on refinancing before I retire although I used to think I should. I will keep a a line of credit tied to my home for access my equity.

  14. Can you just get a job at McDonalds for awhile to get enough W-2 income to get you over the hump? If you look at the NPV of the reduced mortage payments over time, you might be the higher paid burger flipper in history.

    I read your blog a lot and I’m always looking at quirks in incentives, but it’s usually related to tax quirks (there’s a lot of them). I actually calculated out that I would be paid the equivent of about $21k (in 2012 dollars…actually about $70k in actual $’s when I retire) to quit my job for a year just based on the lower taxes of converting my standard IRA’s to Roth IRAs if I have no income for the year. Lots of assumptions in that model so actual figures could be much more (or less). I won’t do it since I like my W2 income, but will be nice to know I have this “bonus” if I do lose my job at some point.

    1. At my age, I’ve graduated from McDonald’s. I opened up for MCD at 6am when I was 15 years old. If I am to go back to fast food, I’m going to apply to In N’ Out Burger baby!

  15. Yeap, that’s how it goes. JD also couldn’t finance his new condo and ended up paying cash for it. Hopefully we won’t have to finance anything soon. I’m 99% sure we are dead to bankers too. My wife doesn’t make enough money on her W2.

    1. I’ll have to check the JD story out as I’m sure his windfall from selling GRS was ginormous. Paying cash ain’t the worst thing, especially given JD is probably not aggressively into stock investing.

  16. Bummer. That must have been frustrating. At least it was only for a small amount and you already have a fantastic rate after your last refinance. Even if it wasn’t going to work, that assistant should have contacted you. In any customer service linked business follow through is paramount. I have had hugely varying support from bankers at Chase for ex. Only a few actually take the time to go the extra mile and follow all the way through. If we have to continually “chase” them they aren’t doing their job well.

    Try not to take Citi’s response personally. As you said in the Zuckerberg hypothetical example, banks just don’t know how to handle asset based refinances. I’m glad my mother refinanced before she retires. She had a harder time getting it done after divorcing and having less income.

    That’s a good tip to check online rates whenever you are considering refinancing though. I love to comparison shop. I just did that this week looking for printer ink!

    1. Chasing a chase rep is so comical, it’s stupid. The problem lies in who these folks hire. Big banks need to up their training programs b/c if they are hiring uncourteous folks who have thin financial knowledge to try and gain business from existing or new clients, things will blow up in their face.

  17. This is the exact situation my wife and I find ourselves in. We have no W-2 income and figure that we’ll get turned down to do a refi now. We re-fi’d about two years ago, but rates are much better now. I really would love to be able to pursue getting it done, but do not want to just set myself up to get turned down.

    1. If the rates now are at least 0.5% lower and your breakeven is less than 1/4 the amount of time you plan to stay in your house, I’d inquire about an asset based mortgage refi. Can’t hurt.

  18. I’m in an interesting position. I started the refinance process a month ago so should be closing within a few weeks. Just lost my job Monday. technically I’m still on payroll and hopefully this won’t affect the refinance process. We’ll see. I have my fingers crossed!

    1. Yikes Jose. That is a precarious position. My recommendation is to not volunteer any more info than the bank asks. Depending on how long more you are on the payroll for, you could have a perfect situation. Banks generally ask for the last two W2 stubs = 1 month. Good luck!

      1. Luckily they have the last wo and I have two more coming so that should be covered. Unless the underwriters read your blog :D

  19. Money Beagle

    I would imagine that these same concerns would arise for those who are making a good income but are self-employed or small business owners. My aunt and uncle used to own a retail store, and even though it was largely successful, I know they had many of the same problems when attempting to get personal financing.

Leave a Comment

Your email address will not be published. Required fields are marked *