Purchasing a home as a self-employed person does not have to be challenging or complicated. But if you have ever dealt with a big box lender, you might have come away from the experience thinking that it is.
Blue Square Mortgage has helped many self-employed borrowers to successfully move into their dream homes with fast and flexible financing. Below, we answer some of the most frequently asked questions we receive about buying a home as a self-employed person.
FAQs About Buying a Home While Self-Employed
Q: How do self-employed people qualify for a mortgage?
A: As you probably know, traditional employees apply for a mortgage with a W-2 form as documentation of their income. But as you also know, you do not have that form when you are your own boss.
So, how do you get around it? If you do not write off too much you can qualify with your tax returns. If tax returns are not an option you can apply for a bank statement loan. The process for applying for a bank statement loan requires bank statements instead of your tax returns. No income loans are also an option in some instances.
Lenders look at your income as portrayed on your bank statements to figure out whether to approve you.
Q: Is it hard to get a mortgage if you are self-employed?
A: It certainly does not have to be harder to get a mortgage if you are self-employed. What will make it hard is if you don’t use a broker like Blue Square Mortgage with extensive experience and knowledge closing self-employed individuals.
As long as you have sufficient income to afford the mortgage payment and your credit score and debt-to-income (DTI) ratio are healthy, you should be able to get a mortgage.
Q: Do mortgage lenders look at gross or net income for the self-employed?
A: When you apply for a mortgage as a self-employed person, lenders are interested in your adjusted gross income (AGI) rather than your gross income averages over the past two years.
Q: Are self-employed mortgages more expensive?
A: The interest rate for a self-employed borrower qualifying with tax returns will be in line with what it would be for a traditional employee, assuming all else is equal. Since the lender’s risk is higher for a loan using only bank statements or a no income loan the rate would reflect the higher risk. Blue Square Mortgage offers rates and fees that are much lower than most across all of our programs
Q: How much income history do I need for a self-employed mortgage?
A: You need to document two years of self-employed income when you are applying for a self-employed mortgage.
Q: What kind of mortgage can I get for the self-employed?
A: Self-employed borrowers may qualify for a range of different mortgages including conforming loans, jumbo loans, FHA loans, VA loans, and so forth.
Apply Quickly and Easily For a Self-Employed Borrower Loan in Seattle or Beyond
If you have other questions about self-employed borrower loans or are ready to apply, Blue Square Mortgage can help. Please call us today at (206) 352-6453 to schedule your consultation. We work with self-employed borrowers throughout Washington State and Colorado.