Today there are many more self-employed people than ever before. While it’s a great feeling to work for yourself and create your own success, it does come with its hardships. Getting a mortgage could be one of those hardships; however, it’s easier today than it sounds.
The mortgage crisis seemed to cause a crackdown on those working for themselves simply because they didn’t have the paperwork salaried employees had. Luckily, there are ways you can still get a mortgage as long as you are diligent about your paperwork.
Keep reading to learn the simple rules you must abide by to get a mortgage if you are self-employed.
How Long Must you be Self-Employed?
There’s a myth surrounding self-employment. Many people think you have to own the business for at least two years before you can even apply for a loan. This used to be the case, but not today. Even Fannie Mae, an investor of conventional loans, allows borrowers owning their own business for just one year to qualify.
Here’s the catch. You must have experience in the industry. For example, let’s say you worked as an accountant for a company for five years. Then you decide to open your own business. You own it for one year and need a mortgage. You might get through the application process because you have the experience to back you up. It shows the lender that you have what it takes to succeed. While this is a new venture, you have the experience in the industry to make it work.
What Paperwork do you Need?
The paperwork is often the nightmare of getting a mortgage as a self-employed borrower. We recommend starting off keeping the right paperwork right away. This way when you decide to apply for a loan, you have everything ready. Basically, you’ll need:
- 2 years of tax returns including all schedules
- 1099 forms, if applicable
- Asset statements for the last 12 months
- Profit& Loss Statement
What About Income?
Here’s where things get tricky, though. What do your…