Being self employed isn’t easy when trying to get a home loan, it often presents challenges for many with the abundant amount of information requested. We’re going to cover some of the basic checklist items you will be asked to provide and some alternative solutions should you need lending outside of traditional methods. We’ll help you determine which Self Employed Mortgage Loan is best for you.
Basic Self Employed Checklist:
- Most Recent 2 Years Personal Tax Returns
- Most Recent 2 Years Business Tax Returns
- Any W2’s or 1099’s if applicable
- Paystubs if applicable (you pay yourself as an employee)
- Photo ID
- 2 Months of Bank Statement or similar Asset Statement for the down payment
Looks pretty simple doesn’t it? The problem often rises with the deductions claimed reducing the overall qualifying income. As an example we might see gross incomes at $200,000 with actual taxable income closer to $60,000 making it difficult to qualify for a $300,000 home. We will review your most recent 2 years of tax returns and come up with an average. If the most recent year is declining that year will trump any average and we will take the lower amount. Aggressive swings up or down in income must be explained due to increased sales, slowing economy, or whatever the reason. The bank wants to know the risk they are lending to. Sometimes clients also have extensions involved which is fine but, the lender must have 2 years of filed tax returns to approve the loan.
*There is always an exception though! If you have excellent credit, good financials, if purchasing at least 20% down payment, and been self employed for 5 years you might be able to qualify with 1 year of tax returns. We will need a full application and checklist to determine your eligibility. You must be an excellent client to bypass the 2 year normal requirement.
Now if you don’t qualify for the above lets review our Bank Statement Self Employed Program. It’s actually a very streamlined loan product with limited documentation as compared to the traditional banking channels. There is no tax return, no paystubs, no w2, no income verification at all!!! You must be in business a minimum of 2 years with qualifying credit scores we will cover after speaking with you. Depending on your down payment scores can go as low as 600 for most. Next you will need to start reviewing your last 12 – 24 months of personal or business bank statements. We will consider any deposits into the account and subtract any “transfers,” adding up the totals of each month then dividing by 12 for an average monthly income. So whats the catch? These loans typically come with a higher interest rate and often times higher fees by as much as 1%. The good news is there is no PMI if you put down less that 20% on a purchase so its not such a bad trade-off considering you do have a lender that is willing to lend you money!
Lets review the checklist for the Business Bank Statement Program / Bank Statement Self Employed Program:
- 12 – 24 Most of Personal or Business Bank Statement (we will help determine this)
- Photo ID
- 2 Months of Bank Statements or similar Assets for the Down Payment
We have the newest and most advanced mortgage products the industry has to offer with a variety of options to help best identify and put you in the best position on your next home loan
Call us today 281-627-4222 or click on the “quick quote” on this page. We’d love for you to experience our award winning service with the best fha mortgage rates.
Written By: Steve Head / Top Producing Loan Officer