While it can be daunting, don’t let anyone tell you that you’ll never get a mortgage if you’re self-employed. Armed with the right information and a little persistence, you’ll be able to have your own home and home office, too.
The underwriting process is a bit more complicated for America’s 15 million self-employed workers. Because the most important things lenders review to qualify you for a mortgage are income and assets, additional documentation of personal or business income will be required if you are self-employed. Your income is used to determine how much house you can afford and your assets can reveal how much down payment you’ll bring to the table. Take some time now to gather your documentation of income and assets before heading to your mortgage lender’s office.
Debt-to-income ratio is another important factor in determining mortgage worthiness. Pull together your tax records, but bear in mind that extensively writing off expenses can make your income appear lower and skew your debt-to-income ratio.
If you know homeownership is a future goal for you and your family, there are a few steps to take now to make yourself a more appealing mortgage candidate:
• Optimize your credit score by doing everything you can to boost it.
• Make a plan to pay off your debt that makes sense for you and your future goals.
• Offer a substantial down payment if your assets allow. The more your down payment reduces the total loan amount, the lower your monthly payment will be.
• Have significant cash reserves to indicate you are a stable borrower able to weather changing financial winds.
Take some time to evaluate your income records, credit report, assets and liabilities before shopping for your new home and working with a mortgage lender. Being well-prepared will help answer any questions you have – or help you know what questions to ask.
Capital City Home Loans offers an extensive menu of products to serve your individual needs. Want to know how much house you can afford? Check out our Mortgage Calculators to see what your payments would be. For loan assistance, speak with one of our mortgage bankers today at (855) 845-2433 or apply online here.