Can I Get Approved for a Mortgage if My Income Comes from the Cannabis Business?
Short Answer:
Under some circumstances, income derived from a cannabis business may be allowed to be used for mortgage approval.
Longer Answer:
As the legal cannabis industry continues to expand, more people are earning their livelihoods from cannabis-related businesses. If you’re one of them, you may be wondering: Can I get approved for a mortgage if my income comes from the cannabis business? The answer depends on the type of loan you’re seeking, the state you are trying to buy in and the specific policies of the lender.
Federal Law vs. State Law: The Ongoing Challenge
Even though cannabis is legal in many states, it remains illegal at the federal level. This creates complications for mortgage lenders, especially those regulated by federal agencies. Most large banks and mortgage companies must follow federal law, which can make it difficult for cannabis industry employees to qualify for a home loan.
How Major Mortgage Programs Treat Cannabis Income
Fannie Mae
Fannie Mae, one of the largest sources of mortgage financing in the U.S., does allow borrowers to use income from legal cannabis employment—with an important caveat:
- You cannot have an ownership interest of 25% or more in the cannabis business.
- If you are a regular W-2 employee (not an owner or major stakeholder), your income from a state-legal cannabis business can be considered for mortgage qualification, provided you meet all other standard requirements and can document your income.
Freddie Mac, FHA, and VA
- Freddie Mac does not allow income from cannabis businesses to be used for mortgage qualification, regardless of your role or ownership status.
- FHA (Federal Housing Administration) and VA (Department of Veterans Affairs) loans also do not out-right permit the use of cannabis-related income for mortgage approval. These agencies follow federal law strictly, and since cannabis remains illegal federally, income from the industry may not consider stable.
What Does This Mean for You?
- If you are a W-2 employee in the cannabis industry and do not own 25% or more of the business, you may qualify for a Fannie Mae Conventional backed mortgage.
- If you are a business owner (owning 25% or more), or if you are seeking an FHA, VA, or Freddie Mac loan, your cannabis income will not be considered.
- Private lenders and some state-chartered credit unions may have their own policies, but these loans often come with higher rates and stricter terms.
Documentation You’ll Need
If you’re applying for a Fannie Mae loan with cannabis income, be prepared to provide:
- Recent pay stubs
- W-2 forms
- Tax returns (typically two years) to show no ownership in the business
- Proof that your employer is operating legally under state law
Final Thoughts
Getting a mortgage with cannabis income is possible, but only under certain circumstances. Fannie Mae is currently the only major agency that allows it, and only for non-owners. FHA, VA, and Freddie Mac loans do not permit cannabis income at all. If you’re in the cannabis industry and considering buying a home, work with a knowledgeable mortgage professional who understands these nuances and can guide you to the right loan program.
These blogs are for informational purposes only. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. Should you have any questions about the information provided, please contact me.
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