Self Employed Buyers – How to Finance Your Home

If you’re self employed, how do you qualify to buy a home? How do you satisfy a lender without regular bi-weekly paychecks?

Many self employed people are afraid that they can’t qualify for a mortgage, because they don’t receive a certain amount of income every two weeks.

Here’s the good news:  many self employed people can qualify to buy a home. If you identify as a sole proprietor, W-9 employee, freelancer, or independent contractor, your loan officer should be able to help you.

Here are two questions to consider:

  1. Have you been working your current field for at least two years?
  2. Can you demonstrate income in that same field for the past two years?

Fortunately, there are a number of loan programs available for self employed home buyers.

Checklist for Self Employed Home Buyers

The first step to loan qualification is to put your file together, because you will need to demonstrate your income to the loan officer. Here’s a list of documents that you will need to submit to the lender:

  • Past two years of 1040 tax returns – including all schedules
  • 12 months of bank statements
  • If you produce W-2 statements for yourself, include your business tax return.

Applying for a mortgage shouldn’t be difficult, if you can demonstrate that your business has earned adequate income over the past two years. You may need to talk to your CPA, since you may need to revise your tax returns to reflect fewer deductions and more income.

NOTE: In the past, there have been programs that require only one year of income instead of two years. Most programs require two years, but since programs change often, be sure to check with your lender for current requirements.

For More Information

For more information about qualifying to buy a home, read my article about how to calculate your mortgage qualification. To learn about lending options, you can also read about how to choose a lender. Ready to start shopping for a home? Read about my services for home buyers.

Good luck! As always, contact me anytime with questions.