Qualifying For A Mortgage When A Shutdown Drops Your Income

If you want to buy a home but your income was slashed by the shutdown that began in December 2018, you're not the only one wondering if you can still go ahead with a purchase. While the loss of income from a shutdown can make it harder to purchase property, it's not the end of the world, at least in terms of real estate.

Explain Your Situation

Always start by explaining the situation. You're not alone, and every mortgage processor, real estate agent, and seller is aware of how the loss of income during a shutdown can affect financial profiles of buyers. You could hit the jackpot with an agent and a bank that want to try to get around the barriers imposed by the shutdown and the dip in your income. Whether or not you're in the group of federal employees receiving back pay at the end of the shutdown, you still have a chance to proceed with a home purchase.

Try to Keep Your Credit Score Up

If the shutdown cut your income but you were able to stay afloat by making payment arrangements and minimum payments, do that so your credit score stays up. Don't attempt to make your usual larger payments, if that's what you did before the shutdown. That will just deplete what money you do have. For example, say you normally pay off your credit card balance in full each month. When you get your statement, pay the minimum. It may feel bad to have interest accumulate on the account, but you'll save your cash so that, if needed, you can make payments again in future months while your income is still catching up. You'll preserve your credit score, or at least prevent it from dropping due to missed payments.

Look for Help From Your Bank

Many banks and credit unions stepped up after the shutdown went into its second week. They wanted to provide loans and deferred payments to those affected because the banks knew that it wasn't the fault of their customers. You may want to see if your bank's mortgage department could help you out. If you're that close to qualifying for a mortgage and can prove that befpre the shutdown you would have qualified, your bank or credit union may be able to help you with getting a mortgage. That's not a guarantee. But given that banks and credit unions know how the shutdown affected people financially, it is worth checking out if your original loan processor couldn't approve you.

Meet with your agent to discuss your next course of action. Let the agent know that your income is still suffering the effects of the shutdown, and you'd like to know your options. Your agent will understand and will brainstorm with you what to do next.