Many think that just because they are self-employed, they can’t apply for a mortgage, and today in Sean La Rue Home Loans we are going to explain why that’s very far from true.
One of the main questions is: How long must you be self-employed to get a mortgage?
You may not have to show a 24-month self-employment history to get a mortgage. For instance, Fannie Mae says that you may qualify with 12 months of self-employment if you have previous experience in that field, and your income is at least as much as you earned in that field before becoming self-employed.
Mortgages for self-employed borrowers
Let’s go over the usual requirements
Proving business income
Self-employed borrowers no longer need to prove access to the business income.
The applicant, however, may still need to show that the business earns enough to support income withdrawals.
One year of tax returns
Self-employed borrowers may qualify with just one year of tax returns. Those returns must show at least 12 months of self-employment income.
The debt-to-income ratio will also have to meet the lender’s guidelines.
Self-employed “side” income
Borrowers qualifying for a mortgage using the income of their “regular” job don’t have to prove what they make on the side from their business. This side income could be
If you decide to apply for a loan with your own income, and your co-borrower is self-employed, lenders can ignore that business in underwriting.
If your income is consistent you’ll be in a safe area. However, if it suffers ups and downs, you won’t be able to use it to apply for a loan.
Make sure to explain properly any decreases that your income has suffered along the years.
So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.