Next month, Colorado, Oregon, and Washington voters will decide whether or not to legalize marijuana use for adults and to tax its sale. An interesting question came up as a result: If the bill passes into law, will this open up a new revenue stream for people who want to buy their own home? In other words, could a person create a side income with the sale of marijuana to help with their down payment and monthly income qualification?
In the past, people who made money through drug sales, unclaimed tips, or other “cash under the table” means could qualify for a mortgage using the No Income Verification loan program. But that animal is now extinct, and all borrowers must document their incomes.
The answer to the questions appears to be no. Even if voters make recreational marijuana legal, it is still against federal law. And because federal law preempts state law, it is highly unlikely that lenders will accept income from the sale of marijuana for a home loan.
Wells Fargo has already addressed this issue in a statement from their correspondent group: “Sellers are reminded that all income and asset sources used to qualify borrowers must be legal at the local, state, and federal level. Any income or assets derived from an activity or source that violates federal, state, or local laws cannot be considered for loan qualification in order to meet Wells Fargo Funding purchase requirements.” (Quote from Mortgage News Daily)
