The connection between marijuana, job growth and mortgages

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Michaela Phillips, Guaranteed Rate, Inc.

Michaela Phillips, Guaranteed Rate, Inc.

BOULDER – In 2015, the legal marijuana industry created more than 18,000 jobs in Colorado alone, the Washington Post reported last month. As the industry continues to grow and expand into more states (marijuana was on the ballot in nine states this election), thousands more jobs could potentially be added in the next year. What does this mean for the future of home ownership?

The legalization of marijuana has created a long list of stable jobs, including plant trimmers, budtenders, regulators, security, administrative staff, reviewers, retail shop owners, farmers; the list goes on. Prior to legalization, many of these jobs had been limited to the black market or to employees of the medical industry with specific qualifications. Now that marijuana is becoming legal in more states, these jobs are becoming mainstream, which makes them available to many more people. Marijuana has also indirectly created and supported a number of other job types, including lawyers, book-keeping services, warehouse landlords and property managers, lighting manufacturers and irrigation equipment producers.

As marijuana legalization passes in more states, this job growth is sure to continue to spread across the country. This past Election Day, several states, including California, Nevada, Maine, Arizona, and Massachusetts, voted on the issue of legalizing marijuana for recreational use. Meanwhile, voters in states like Florida, Montana and North Dakota voted on whether medical marijuana should be permitted. The result of each of these decisions will have huge implications for that state’s economy.

It’s important to note that, at 5 percent (as reported in September 2016), the U.S. unemployment rate is at its lowest since 2008. With secure employment comes secure income, and as a result, the potential for home ownership.

Those employed in the marijuana industry may face challenges securing a loan due to the fact that marijuana remains illegal under federal law, which governs banks and lenders. Many down payment assistance programs, including FHA loans, do not permit marijuana-related income to count toward mortgage qualification.

Fannie Mae’s 3% down payment program is different. W2 employees who work for a legal business that sells marijuana can use this income to qualify for a mortgage just like any other W2 employee. However, if you own 25% or more of a marijuana-related business, you are considered an independent contractor, and Fannie Mae will not recognize this as a viable source of income.

If you’d like to take it a step further and purchase an investment property, Fannie Mae requires just 20 percent down for a single-family investment property, which is governed by the same qualification criteria mentioned above.

Michaela Phillips is the Vice President of Mortgage Lending at Guaranteed Rate, Inc., the 8th largest retail mortgage company in the country. Since entering the mortgage industry in 1994, she’s consistently been a top producer. Being a VP at Guaranteed Rate offers many advantages to her and her clients including unparalleled customer service, efficiency, and most importantly competitive rates. Contact Michaela at 303.579.5517, e-mail michaela@michaelaphillips.com or visit michaelaphillips.com. NMLS:312874.

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