Getting a Mortgage when Self-Employed
Just because you’re self-employed does not mean you can’t own a home! It is true that self-employed borrowers may have a tougher time getting approved for a mortgage because of their non-traditional income structure. However, there are multiple loan programs available that allow self-employed workers to get mortgage financing.
Although mortgages for self-employed borrowers may require more documentation, all self-employed borrowers go through the same pre-approval process as regular salaried borrowers.
How to Show Proof of Income for Self-Employed Borrowers
The biggest challenge self-employed borrowers face is showing proof of income. Often times, self-employed workers have varying annual income. In order to understand your average income, the lender may evaluate your business income for the past two years and use the average as your annual income to qualify you for a loan.
Traditional Documentation a Self-Employed Borrower may Need
The documentation required may vary depending on the type of business you own. Below are a few examples of some typical documentation for self-employed borrowers:
- Two years of federal income tax returns (business and personal)
- Profit and loss statement (if you are a small business owner)
- Copy of business license
- Letter from CPA stating you have been in business for at least two years
Along with providing the proper documentation to show proof of income for self-employed borrowers, it is important to have a good credit score. Having a good credit score may off-set the risk associated with qualifying a borrower with non-traditional income.
Alternative Documentation: Bank Statement Program for Self-Employed Borrowers
GuardHill’s bank statement program may make it easier for self-employed borrowers to purchase or refinance a new home, second home, or investment property. This program allows a self-employed borrower to qualify based on alternative documentation if they are struggling to qualify based on traditionally required documentation.
- Qualify based personal or business bank statements
- No tax returns required
- May qualify based on multiple streams of income in addition to bank statements such as W-2, rental income, retirement, social security, and more.
- Loan amounts up to $3 Million
- Minimum down payment of 10%
- Gift funds allowed
How Long do you Have to be Self-Employed to Qualify for a Mortgage?
Typically, you should be self-employed for more than two years before applying for a mortgage when self-employed. Mortgage lenders prefer to see consistent proof of income before
One of the Best Mortgage Lenders for Self-Employed Borrowers
GuardHill is one of the best mortgage lenders for self-employed borrowers due to our unique lending platform. Our platform allows us to provide mortgage financing to borrowers with varying financial profiles and needs, such as bank statement programs for self-employed borrowers.
GuardHill is not bound to one set of guidelines, so we will match your financial profile with the loan program that is right for you. We pride ourselves on being able to get the tough deals done.