Being self-employed does not stop you from getting a great mortgage, but the way lenders verify your income is different from a W-2 employee. Knowing the rules ahead of time makes the process smoother.
How lenders view self-employed income
Lenders typically average your net income over the past two years of tax returns. Because business write-offs reduce your taxable income, your qualifying income may be lower than your gross revenue.
Documents to prepare
- Two years of personal and business tax returns
- Year-to-date profit and loss statement
- Business bank statements
- Proof the business is active and ongoing
Alternative options
If your tax returns do not reflect your true cash flow, programs like bank statement loans or, for investment properties, DSCR loans can qualify you on different criteria.
Self-employed income has more nuance than most. Talk to us early so we can choose the program that fits how you actually earn.