Mortgage For The Self-Employed

“I AM SELF-EMPLOYED AND I’M LOOKING TO PURCHASE A HOUSE. WHAT DO I NEED TO DO TO GET A HOME LOAN AND WHAT ARE MY OPTIONS IN TERMS OF A MORTGAGE?”

Just like someone who is employed by a corporation, you will need to show proof of income from your business. As a general rule, most lenders want to see two or three years’ worth of tax returns from a self-employed applicant, although some mortgage bankers require only one year. Also, most lenders will require other paperwork, such as profit and loss statements, expense reports, business account statements, etc. done by a certified public accountant. As for what type of mortgage you can get, remember that lenders are looking for steady income and a positive future earning potential. If your business has been successful for the last two or three years, you should be able to get a better rate and a better deal on your mortgage. However, if your business hasn’t quite taken off yet, you can do a no-doc loan (no document) in which the lender won’t ask for any proof of income. Be forewarned though: the interest rate for a no-doc loan is likely to be two or three percentage points higher than a conventional loan. As with any loan, the key to getting a fair deal on a self-employment loan is to pay down your debt, build up cash for a down payment, and have good credit.  ∆