Football season is fast approaching. Sports betting offers a winning combination for your bank account, but how will it affect your long-term chances of homeownership? Will the proceeds help you make a down payment and get a mortgage? Here’s what the experts say.
Can I use my sports betting income to qualify for a mortgage?
According to one survey, about 20% of Americans have accounts with online sports betting services, and in theory, these people could use their winnings (as long as they are recorded and can be proven) as income supplements for mortgage applications.
In reality, it’s much more complicated.
“It’s difficult, but it’s possible if you have a good enough history,” says Phil Crescenzo Jr., vice president of the southeast division of Nation One Mortgage Corp. “Casinos and online betting establishments will issue you a 1099 for your winnings and you can submit that on your tax return. In 24 years, I’ve only been able to take advantage of this a few times, and it’s not been easy.”
For income to be considered for a mortgage, you must have “prospects of sustainability,” said Crescenzo Jr. If you don’t have a history of regular, consistent winnings, your income won’t be enough to qualify for a loan.
Plus, you may have to work harder to find a lender willing to lend to you, says Matt Dunbar, senior vice president for the southeast region at Churchill Mortgage.
“Before proceeding, it’s important to check that there are no restrictions on the use of gambling proceeds with your lender or mortgage product,” Dunbar says.
In 24 years I’ve only been able to use it a few times and it wasn’t easy.
— Phil Crescenzo Jr., Nation One Mortgage Corporation
No matter how good your record may seem, you should be prepared for some challenges. Professional poker player Chris “Fox” Wallace has made a lot of money at the World Series of Poker, including previous championships where he has won over $507,000.
Initially, Wallace was offered the more expensive bank statement mortgage, often sought by self-employed borrowers who provide bank statements as proof of income. Because such products are riskier, lenders charge higher interest rates.
“Finding a lender who is greedy enough to fight for you is tough,” Wallace wrote on the online poker community CardsChat last year. “After calling dozens of people, meeting with nearly a dozen, and prepared to wait a year to get a better loan rate while looking for work, I finally found someone who would lend to me at the standard rate.”
Will sports betting negatively impact my mortgage application?
Having a DraftKings, FanDuel, or other online sports betting account, and whether or not you post your wins and losses, doesn’t mean you can’t get a mortgage.
“The existence of a sports betting account, and the small amounts of income and expenses associated with it, is not necessarily a cause for concern for a lender during the mortgage process,” Dunbar says. “Even if a borrower has a history of gambling expenses and losses, if they have managed their debt and qualify for a mortgage, these activities are unlikely to be a red flag.”
But consistent losses over two to three years may worry lenders, Dunbar said, as the pattern could signal a higher-risk borrower.
“Regular gambling behaviour may prompt further scrutiny of an individual’s financial management and resources,” Dunbar said.
Crescenzo Jr. said he could avoid the additional scrutiny by opening a separate bank account just for sports betting. “Anything that’s tied to your main (bank) account is definitely going to be monitored very closely,” Crescenzo Jr. said.
Do I need to tell my lender that I bet on sports?
If you’re only planning on gambling a few times with friends this year, there’s no need to actively tell a mortgage lender that this is having any effect on your income. “Records of winnings are only required if the applicant wants that income to be considered in their debt-to-income ratio,” says Dunbar.
Other sources of income eligible for a mortgage
There are no set income requirements to qualify for a mortgage. Lenders look at a measure called your debt-to-income ratio (DTI) to determine whether you can reasonably repay a certain loan amount at a certain interest rate.
Besides sports betting income, you can apply for a mortgage with many other sources of income, such as:
- Employment income (including self-employment income)
- Rental income from owned real estate
- Stock Dividends
- Regular savings account interest
- Disability allowance
- Social Security Benefits
However, the same rules apply: income must be documented and reliable.
Conclusion
If you’re looking to buy a home and are thinking about using your sports betting winnings to pay for it, know that it may be difficult to incorporate it into a mortgage application. Your winnings must be consistent and documented, and you’ll need to find a lender who will work with you. The good news is that there are plenty of other sources of income that qualify for a mortgage. If you’re not sure if your income is sufficient, talk to a loan officer to see if you qualify.
