Self Employed Mortgage

1. Can I qualify for a mortgage if I’m self-employed?

Yes! You will still have access to the majority of mortgage products however the documents requested by the self employed mortgage lender will be different to someone who is employed.

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2. What documents do I need to provide for a self-employed mortgage?

Typically, self-employed borrowers will need:

• Bank statements from the past 12-24 months

• Personal and business tax returns for the last two years

• Profit and loss statements (if available)

• Additional documents that show consistent income, depending on the lender’s requirements

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3. Will I need a higher credit score as a self-employed borrower?

Credit score requirements vary, but self-employed borrowers often benefit from a higher score, which can improve access to more mortgage options and better rates. However, options are available even for those with lower credit scores, depending on the loan type and lender.

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4. How is my income calculated if I’m self-employed?

Lenders usually average your income over the last two years based on tax returns or bank statements. They may account for fluctuations in monthly earnings and can sometimes factor in additional sources, like assets, to determine qualifying income.

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5.Can I qualify for a mortgage if my business is relatively new or recently gone self employed?

If your business is less than two years old, qualifying may be more challenging but not impossible. Some lenders consider shorter business histories if you have a strong credit profile, steady income, or a history of working in a similar industry before starting your business. The minimum time required to be self-employed and secure a mortgage is typically 12 months.

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6. Do self-employed mortgages require a larger down payment?

Not always, but a larger down payment can increase your options and help you secure better rates. Some lenders may require 10-20% down, while others have more flexible options, especially with bank statement or asset-based loans.

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7. Can business expenses impact my mortgage eligibility?

Yes, self-employed individuals often take tax deductions to reduce taxable income, but this can lower the qualifying income lenders see. It’s a good idea to balance deductions with income when planning to apply for a mortgage.

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8. Are mortgage rates different for self-employed borrowers?

Mortgage rates for self-employed borrowers can vary based on income stability, credit score, and other factors. Some self-employed mortgage products may have slightly higher rates due to risk factors, but working with a mortgage specialist can help you find competitive rates.

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9. How can I strengthen my mortgage application as a self-employed borrower?

Strengthening your application can include:

• Keeping personal and business finances separate

• Ensuring good credit and paying down debts

• Providing comprehensive documentation of your income and assets

• Making a larger down payment, if possible

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10. How long do I need to be self-employed to qualify for a mortgage?

Most lenders prefer that you have been self-employed for at least two years. However, some lenders may consider 12 months and less time with additional documentation or if you previously worked in a similar field before becoming self-employed.

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11. What if my income varies from month to month?

Many lenders are accustomed to fluctuating income from self-employed individuals. They typically average your income over time (often two years) to account for ups and downs.