Self-Employed? You Can Still Buy a Home

October 16, 2020
Last updated:
April 13, 2022
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If you’re self employed and were planning on buying a house in 2022, you might be wondering how your employment status will affect your ability to secure a mortgage. While government-backed mortgage giants Fannie Mae and Freddie Mac have announced new standards and document requirements for self-employed borrowers, and most U.S. lenders are expected to follow, you may still be eligible for a home mortgage loan.

If you are self-employed and think you may be eligible for a home loan, now could be a great time to apply. Mortgage rates are low, and not expected to spike anytime soon. You could get a great deal on a home loan if you meet the new requirements.

What Are the New Self-Employed Mortgage Requirements?

The typical requirements for self-employed applicants for a home mortgage include:

  • Two years of personal tax returns
  • Two years of business tax returns (if applicable)
  • Business license (if applicable)
  • Statement from your CPA affirming you are in business

Formerly, income over the past two years was averaged to arrive at a monthly income. However, if income has dropped significantly, you may need to show extra proof of monthly revenues to prove that you are capable of repaying your debts.

New rules put in place since the start of the recent health pandemic require self-employed home loan applicants to provide extra documents when applying for a mortgage. You will need to provide either:

  • An audited profit and loss (P&L) statement
  • An unaudited P&L statement plus 2 months’ business account statements (or personal statements if there is no business account)

These documents will give your lender insights into revenue, expenses, and net income for the current year. All documents must be less than 60 days old at the date of the loan application, and you may need to present newer documents if they are older than 60 days when you are nearing loan approval.

Can I Get a Mortgage While Self-Employed?

You can definitely still get a mortgage while self-employed. You’ll just need to meet a combination of requirements, which can include the above documentation plus credit score and down payment minimums. As long as an underwriter can be satisfied that you are capable of repaying your debts, being self-employed shouldn’t be an insurmountable obstacle to obtaining a home mortgage loan.

Don’t assume your credit score is too low, or that you don’t have enough for a down payment. The experts at Sammamish Mortgage can help you find a mortgage home loan program that is flexible for your needs and situation. Self-employment doesn’t have to be a barrier to achieving your dreams.

How Do Unemployment Benefits Affect Mortgage Qualifying?

Most people who are self-employed don’t normally qualify for unemployment benefits, but during the pandemic, many restrictions were lifted. You might be receiving a sum of money regularly under the latest unemployment guidelines.

How do these programs affect your ability to get a mortgage while self employed?

Unemployment benefits

In general, unemployment benefits aren’t counted as qualifying income when you apply for a mortgage. It’s considered short term, rather than a stable ongoing income. Lenders want to know you have a regular income so you can mortgage payments on time for years to come. Lenders will only consider your income outside of unemployment benefits.

Why Should Self-Employed Borrowers Apply for a Home Loan Now?

Mortgage rates have been relatovely low so far in 2022, though they are rising. But with strong buyer demand and low inventory, competition is fierce among lenders who want your business.

Even though the rules are a little stricter, if you are approved for a mortgage the benefits of buying (or refinancing) at today’s rates are significant. It’s a good time to explore the possibilities by using our website to:

How Can I Increase My Chances of Preapproval?

Before you apply to get a home loan while self-employed, make sure you have your ducks in a row. Gather all of the documentation listed above, and be prepared to present proof of steady income.

You may also want to have a slightly larger down payment on hand. Make sure this money is in a personal account, not a business one. Money in your business account should be earmarked for business expenses.

You’ll also want to check your credit before you apply for a home loan. Your credit score will determine what kind of loan you can get approved for, and can also affect your interest rate and down payment amount. The better your credit, the easier it will be to get preapproved.

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Why Choose Sammamish Mortgage?

At Sammamish Mortgage, we see self-employed homebuyers as an important niche we can confidently serve. With more and more people becoming entrepreneurs and starting their own businesses, real estate and finance companies are innovating to support you in achieving your life goals.

This includes helping you get a home loan while self-employed, and working with you to help you meet documentation requests under the latest guidelines. Being your own boss shouldn’t limit your ability to achieve the American Dream!

Sammamish Mortgage has been in business since 1992 and has been assisting home buyers in the Pacific Northwest. If you are looking for mortgage financing, we are here for you. We have mortgage programs in Colorado, Idaho, Washington, and Oregon. Feel free to Contact us with any questions. If you are ready, you can also easily View Rates on our website. You can also Apply Instantly or get a Rate Quote.

Get an Instant Mortgage Rate Quote Today

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