Navigating Mortgages for Self-Employed Buyers

When your buyers are self-employed and want to buy a home, they will go through the same qualifying process as everyone else, with a few exceptions. Lenders will be evaluating their credit scores, amount of debt, and assets and income. Your self-employed buyers will need to have higher credit scores and lower debt-to-income ratios in order to apply for a mortgage.

Verifying income is the biggest difference in the approval process. For buyers who work for someone else, lenders just go to their employers for evidence of income and length of employment. Your self-employed buyers will have to show evidence of income stability, the financial strength of their businesses and the ability to generate a continuous income stream in the future.

The lender will be looking for proof of at least two years of continuous self-employment. This can be evidenced by any licenses they hold, professional affiliations, a DBA or evidence of business insurance. Consistent earnings and payment of income taxes over time will be verified by your buyers providing their past two years of tax returns. IRS profit and loss forms, like a Schedule C, will also be required. These forms tell the lender what the gross income and net income is after expenses for your buyers.

Homeownership is a definite reality for the self-employed if they are organized and have properly kept track of their income. Call or email me so I can sit down with your buyers and help them navigate the approval process.

Skip to content