Tag Archive for: business owner

Buying a Home When You’re Self-Employed

 

While being an independent contractor, freelancer or entrepreneur can certainly be a freeing career choice; it also comes with some challenges. For instance, it can make getting a mortgage loan harder.

Without W-2s, a consistent salary, and an employer to back you up, it’s harder to prove your income as a self-employed professional — let alone show you’re not a risk as a borrower.

Are you planning to buy a home or refinance while self-employed? These five tips could improve your chances of approval:

  1. Get your finances in order. You’ll need to prove your income through bank statements, invoices, profit-and-loss statements, and balance sheets. Be sure they’re ready and organized before applying for your loan.
  2. Reduce your tax write-offs. Maxing out your deductions can seem smart, but it can hurt you when a home loan is on the line. The more write-offs you take, the lower your income, making you seem like a riskier bet.
  3. Boost your credit score. Higher credit scores are always more appealing when getting a loan, so take time to improve yourself. Pay down debts, settle any overdue accounts and ensure your credit report is accurate.
  4. Bring in a co-borrower. When you add a second borrower to the loan, their income is factored in, too. Make sure you choose a co-borrower with good credit, a low debt-to-income ratio, and steady pay.
  5. Keep your work consistent. Don’t switch industries just before applying for your loan. It’s best if you’re in the same line of work for at least two years.

Getting a mortgage while self-employed certainly has its challenges, but it’s not impossible. Reach out today for more home financing guidance.