There are many advantages to being self-employed, but when it comes to qualifying for a mortgage, you’ll find some lenders don’t typically view this work status favorably. However, although it may be more challenging and expensive to get approved when you work for yourself, it is still possible to get the funds you need. There are several steps self-employed borrowers can take to make themselves a more agreeable applicant.
Here’s what you need to know if you’re self-employed and considering requesting a mortgage:
Be prepared to offer a larger down payment
Offering a larger down payment will make you more attractive to lenders. You will appear to be less of a risk if you’re willing and able to put more of your own money into your home up front.
Make sure your debt is minimal
The less debt you have, the easier lenders believe it will be for you to keep up with your monthly mortgage payments. Paying off credit cards and other loans will increase your cash flow and raise your credit score.
Be willing to provide documentation
There’s a good chance lenders will want to view your tax returns for the past two years, profit and loss statements, balance sheets, and anything else that will help them assess your income. Keep good documentation of all this, and don’t hesitate to turn it over when asked.
Show a stable track record of self-employment
The more you can show you are prosperous at being self-employed, the more lenders are likely to approve your application. It’s a good idea to establish a strong history of self-employment, which means reducing your tax deductions as much as you can.
Once you know what to expect when applying for a mortgage as a self-employed borrower, you can improve your eligibility odds.
About Premium Mortgage
Headquartered in Rochester, New York, Premium Mortgage Corporation serves residential real estate markets across upstate New York, Florida, Vermont, Massachusetts, Connecticut, Pennsylvania and Ohio. Since opening in 1999, the company has grown to over 100 employees and attributes its success to matching mortgage financing to individual clients’ needs, while also giving excellent customer service to real estate agents in the community. For ongoing mortgage news, please visit: www.premiummortgage.com and follow Premium on Facebook, Twitter, and Instagram.