Self-Employed borrowers can qualify for a mortgage but will need to provide more detailed documentation to prove their income and job stability.

There are many different documentation types. A self-employed borrower will generally be asked to provide the past two years of tax returns to verify their income. If this is not possible, ask your loan officer about stated income loans or using 12 months bank statements to prove your income.

If you have not been self employed for 2 years one other option would be a no documentation loan. The lender will not require any information about your employment status, or even need to verify that you are employed. The lender will weigh your approval heavily on your past credit history, and credit score. This type of loan will carry a higher interest rate than a full documentation or stated income program, so it is generally not your best option if you meet the criteria of other loan types.

Do you have a business checking account? If so and this account has been established for some time then you may be able to fulfill income documentation requirements simply by providing copies of your last 12 bank statements. In fact some lenders will take bank statements as a full documentation loan, meaning there is no increase to your interest rate due to your self employment status.

Many self-employed home buyers opt for the convenience of Stated Income mortgages. Many small business owners do not draw a regular paycheck, have complicated tax returns, and have difficulty proving their incomes. Stated Income loans offer income document relieve do not require the usual paycheck stubs and tax returns.

 

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