How to Qualify for a Mortgage if You’re Self-Employed

1. How to Qualify for a Mortgage if You’re Self-Employed Mortgage loan options for self-employed home buyers are quite different from other employed individuals. With stricter qualification standards, it is not as easy for self-employed individuals to get approved for a loan. A little over a decade ago, the best mortgage instrument for a self-employed individual came in the form of stated income loans, which required no mortgage documentation to qualify. Today, however, mortgage loan services, products, and standards are much more complex — in addition to the fact that loan options like stated income loans no longer exist. One of the biggest hurdles self-employed home buyers face when applying for a mortgage is having too low of a net income tax on tax returns in order to qualify for a mortgage loan. This is because taking all allowable legal tax deductions pull net income on tax returns down, and mortgage lenders look at a self-employed individual’s net income as opposed to their gross income, which is the standard for salaried borrowers. This is what puts self-employed hopefuls at a disadvantage. Fortunately, you can always turn to a​​mortgage loan officer in Georgia​​if you want to qualify for mortgage loan services and secure financing for your home purchase. To qualify for a loan while under a self-employed status, it is crucial to properly document your earnings as proof of your capacity to repay a mortgage loan. Most lenders will require you to gather at least two years of self-employment earning history in order to qualify for any type of mortgage and this can be documented via your tax returns. As earlier mentioned, the amount of tax deductions you are taking affects what your income looks like on paper, so be careful about the tax deductions you are taking. While this may mean paying more in taxes, it could help you qualify for a mortgage loan if your net income reflects a higher amount.

2. It is also critical to learn how to manage your finances. Just like with any type of loan, creditors and lenders will want to make sure that you have a good credit score, enough cash reserve and/or assets, and a low debt-to-income ratio, all of which give lenders peace of mind that you are able to pay your monthly expenses, even during slow periods for the business. Queensborough National Bank and Trust Company offers ​mortgage loan services​ for all kinds of borrowers, from seasoned investors to first-time home buyers, and even self-employed, soon-to-be homeowners looking for a reliable and trustworthy​​mortgage loan officer to help walk you through different loan programs and ensure the efficient handling of your application for a successful home purchase.