Significant Changes for Self-Employed Clients Looking to Get a Mortgage

Filed under: Market Comentary

Today, I’m sharing news about big changes that just rolled out regarding conventional loans for people who are self-employed.

Are You Self Employed?

If you are running a company or are a member of a corporation, LLC, or a partnership (holding 25% or more as an owner of the company), it means that you are self-employed. These changes also affect people who are working as a sole proprietor, which means that you aren’t filing a separate entity for the business.

This typically applies to people who are running small businesses, as well as independent contractors who are receiving 1099’s.

Rollback in Requirements

The good news is that a rollback is happening. When COVID happened, there was a lot of fear about how businesses were going to survive. A bunch of new rules came up to make it much more difficult for self-employed homeowners to get mortgage. New requirements come up, including additional documentation, bank statements, and more.

Fannie and Freddie just rolled this process back and returned to the original, pre-COVID guidelines.

If you are self-employed, you need 2 years of tax returns (although there are programs for just 1 year). Also, if there are more than 120 days since the most recently filed tax year, then we are going to need to see your profit and loss statements. This process is un-audited, which means it doesn’t need to be reviewed by a CPA or anything like that – you can just print the P&L report from QuickBooks.

Buying a Home Just Got Easier

This change is a big deal, especially since there have been clients that I’ve worked with who were having a hard time getting financing. These new rules make it a lot easier going forward for people who are self-employed to get a loan.

If you own a business and you are thinking about getting a mortgage, then I’m here to help. Contact me any time!

Franklin Loan Center | NMLS 237653
Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, 4131316
For questions or concerns please email