Self-employed applicants looking to purchase a home will have to fill out the same paperwork as those not self-employed, and lenders look at the same aspects such as credit score, debt, assets, income, etc. So what’s the difference between a self-employed applicant and everyone else? When working for a company or business, lenders will verify the amount – and history – of that income to determine how likely you will continue to earn it.
Lenders are typically looking for the following:
- Income stability
- Location and business
- Financial strength
- Potential future revenue
To apply for a mortgage while self-employed, you will need to provide a few documents showing a history of uninterrupted income for at least two years. Employment verification will also be examined, which can include:
- Client lists
- CPA verification
- Proof of licensing or other organization
- Insurance confirmation
- Doing Business As (DBA) documentation
Income documentation will also need to be ready to go. It’s crucial to show steady, reliable income for the past two years. Mortgage lenders generally look for:
- Personal tax returns (W2s)
- Profit and loss forms (Schedule C, K-1, Form 1120S, etc.)
If you have been self-employed for less than two years, to qualify for a mortgage, you’ll need to show that your business has been active for a minimum of 12 consecutive months. Additionally, your non-self-employment history will also be verified. Your training and education might go under the microscope to ensure stability will be gained by your success.
Check your Debt-to-Income Ratio (DTI), ensure your credit score is high, and separate your business expenses as well.
Self-employed and want to apply for a mortgage? Contact the experts at EB Mortgage today!
EB Mortgage is a locally-owned mortgage company with experts in new home purchase, refinancing, and commercial loans. Our wholesale rates can’t be beaten. We offer more products, more options, and more solutions. Our “3C” Process is simple: complete our pre-approval request, consider options based on your requirements, and choose the offer that suits your needs best. Call us at 866-246-0516 or e-mail contact@ebwmtg.com today.
Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com.