It’s a common myth that you can’t get a mortgage if you’re self-employed. We’re here to bust that myth and tell you exactly how to obtain home financing as someone without a traditional W-2.
Being self-employed doesn’t mean that you can’t make your mortgage payments. For this reason, lenders will absolutely consider self-employed borrowers! When a lender evaluates a potential borrower’s financial situation, they are focused on determining if that person will be able to repay their loan. After all, it doesn’t make sense for a mortgage lender to loan money to someone that can’t repay them. Lenders will look at your credit score, down payment amount, and other aspects of your financial situation to decide if they can offer a mortgage. If you are financially stable, a lender will see that, regardless of whether you are self-employed.
Here are some of the details a lender will look for in a self-employed candidate.
Just like a lender likes candidates with traditional jobs who have a long, stable history of employment, lenders also like to see that people who are self-employed have done so successfully for some time. The longer, the better!
Having a higher credit score is always a good idea, no matter what type of borrower you are. Making sure you have the highest credit score you can have is a good way to make yourself look more attractive to a lender.
Lenders consider borrowers with higher down payments less of a risk. Putting more money into the purchase upfront is a great way to demonstrate that you’re going to be a great borrower.
A lender will love to see documentation that demonstrates your ability to obtain a mortgage. Consider providing documents like previous tax returns, profit and loss statements, bank statements, business license, a list of assets like your savings or investment accounts, any other sources of income you may have, and proof of your currently rent or mortgage payments.
As someone who is self-employed, you are probably resourceful, driven, and responsible. Self-employed borrowers are often more financially secure than they’re given credit for so don’t let this stop you from applying for a mortgage. If you want to learn more or get started on the path to securing home financing, be sure to contact us today.
Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.