You’ve owned your business for many years or you just started a new one, know that self-employed people can and do get mortgages.
Usually, lenders ask for documentation that includes a minimum of two years of personal and business tax returns, recent bank statements, and documentation of other assets which prove financial stability. Lenders also consider details about the length of time you have been self-employed and how long you’ve done the type of work you are doing.
Lenders may ask for copies of the legal documents that established the business entity as an S-Corp, LLC, or Partnership. The financial strength of the business, cash on hand, demand for its products and services, and the future outlook will all be considered in the approval process.
Exceptions to the two-year rule for self-employment do exist.
Mortgage lenders know there is a difference between a borrower who is self-employed for one year who has worked in the same field for many years, compared to a borrower who is self-employed for one year in a new line of work.
An Example:
If you were a W2 employee in the same field of work for five to seven years, earning 50,000 and opened your own business less than two years ago, you may not need a two-year self-employment history because you’re in the same field and earning similar or more income.
If you are a self-employed borrower in a new line of work, you may need to wait until you can provide two years of income stability even if you have the current income to qualify and are making more than you were prior to opening your new business. In this case, you may have adequate income but lack a long-term history in your new line of work.
We want you to make sure you are working with an experienced loan officer who is skilled in helping self-employed customers. They can look at your big picture, educate you on your mortgage options, and advise you regarding the timeframe needed to satisfy underwriting guidelines and obtain a loan approval.
We are here to guide you through the home buying and/or home selling process. Most people don’t have the desire to learn all things real estate so we do it for you to save you time and money. Call us at 307-635-0303 to schedule an appointment with one of our real estate professionals.
