Mortgage Tips for Self-Employed Buyers

Filed under: Home Buying Tips

If you are self-employed, then there are a few things that need to be considered when applying for a mortgage to buy or refinance a home. Here at Franklin Loan Center, we have experience helping clients like you! Today, there are many options available for self-employed clients. We can help you find the best solution if you are reporting low income on your tax return but really do make enough money for a mortgage payment.

Different Analysis of the Income

When it comes to mortgage approval for self-employment, it is definitely a different analysis of the income. Some people assume that the approval is based on stated income, but there are a few other considerations in this process. Generally, for conventional loans, we look at one or two years of tax returns. It is possible at times to look at only one year of tax returns, instead of averaging the last two years. This process has been a nice change over the last couple of months.

The biggest challenge with tax returns is the push and pull of claiming enough on the return to qualify for the mortgage vs. paying the taxes on a higher income. It is common for self-employed clients to come to me with a strong income based on their bank statements, but their tax returns show a low income due to deductions and write-offs.

Documentation on the Tax Returns

There are times when we work with clients who just don’t document enough on their tax returns. So, we can use alternative methods to qualify, such as bank statements or asset depletion. Depending on the situation, we can use a program where we add up the deposits and use that information as income.

I just wanted to share this information to let self-employed clients know that there are other options than just the full-document method. If you are sitting on the sidelines because you think that you can’t show the self-employment income to buy a home, then talk to me to learn about how I can help. You might be surprised to learn that you can qualify for a loan, with surprisingly good interest rates.

If you are looking for more information about mortgage approval for self-employment, or anything else about home financing, don’t hesitate to reach out to talk to me. Franklin Loan Center is here to help!

Franklin Loan Center | NMLS 237653
Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, 4131316
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