Self Employed Mortgage Loan

Self Employed Mortgage Loans

As self-employed mortgage loan specialist’s, Texas Mortgage Plan understands the unique challenges that come with securing a mortgage loan as a self-employed individual. The traditional income verification processes can make it difficult for self-employed individuals to qualify for a loan, but there are options available.

This program is designed specifically for self-employed individuals and takes into account factors such as business income and tax returns, rather than relying solely on traditional W-2 income.

One of the main benefits of the self-employed loan program is that it allows for more flexibility in terms of income verification. Instead of the traditional W-2 form, self-employed individuals can provide tax returns, profit and loss statements, and other financial documents to prove their income.

Self Employed Mortgage Loan Qualification

To qualify for a self employed mortgage loan, individuals typically need to have been self-employed for at least two years. It’s also important to have a strong debt-to-income ratio and a low debt-to-asset ratio. Here are some of the documents you may be asked for in order to qualify for mortgage:

1. Tax returns: Self employed borrowers will need to provide the lender with their personal and business tax returns for the past two years. This will be used to verify their income and ensure that they have a consistent income history.
2. Profit and loss statements: Self employed borrowers will also need to provide profit and loss statements for their business for the past two years. This will give the lender a better understanding of the borrower’s financial situation and their ability to repay the loan.
3. Bank statements: Borrowers will need to provide their bank statements for the past two to three months to demonstrate their cash flow and assets.
4. Business license and registration: Self-employed borrowers will need to provide proof of their business license and registration. This will help the lender to verify that the borrower’s business is legitimate and that they have been self-employed for the required period of time. You can check your business registration at your state’s Secretary of State website. For Texas entities, click HERE.
5. Other financial documents: Depending on the loan type (Conventional, FHA, VA), self-employed borrowers may be required to provide additional financial documents such as financial statements or balance sheets.
6. Credit score: Self-employed borrowers will need to have a good credit score to qualify for a mortgage loan. Our minimum FICO requirements are 620 for this program.

What if I only recently became self-employed?

Suppose you’re a builder who has only been operating and working for yourself for a year or so — but you’ve been working in the industry since you started an apprenticeship 7 years ago. In this case, special consideration could be taken for being in the same line of work for many years, even if your books are relatively limited. 

Keep in mind that due to responsible lending requirements, not every lender will allow this option. If you’ve been in business for less than a year — even if you have plenty experience working for someone else — it is up to the lender’s discretion to decide on your loan application.

If you do not meet the requirements of the self employed loan, we have other options such as our “No Doc” loan. Contact our specialist so that we can guide you on the best program for your specific situation.