A man in a black and white striped shirt wearing headphones and sitting at a desk in front of his laptop

How To Get a Loan When You’re Self-Employed

Get Your Personal
Loan Options

Apply online with Rocket LoansSM and instantly see what you prequalify for. Enough hypotheticals. See personalized numbers.

Explore your mortgage options

NMLS #3030

*Connect with a mortgage specialist

We teamed up with Rocket Mortgage to help you get house-hunting sooner. Answer a few questions and an agent will reach out to discuss your options.

Get Started by selecting an option below

What kind of loan are you interested in?

What to expect

Tell us what you need and a representative from Rocket Mortgage will give you a call. You’ll have support at every step.

What kind of property do you want to purchase? What kind of property do you own?

Why we’re asking

Rocket Mortgage® can provide a more accurate rate estimate if they know what kind of property you’re interested in.

NMLS #3030
How do you use your property? How would you use this property?

Why we’re asking

Having a little more information upfront helps Rocket Mortgage® provide a personalized rate faster.

NMLS #3030
When are you planning to buy?

Still House Hunting?

Hope you find your dream home soon! In the meantime, it’s never too early to know your rate.

NMLS #3030
Are you a first-time home buyer?

It’s all good:

Whether it’s your first – or second property – Rocket Mortgage® can provide you with a rate estimate.

NMLS #3030
Do you have a second mortgage?

It’s all good

If you have a second mortgage, it’s no problem. Letting us know helps to customize your rate.

NMLS #3030
What is your credit score?

Don’t know your score?

Don’t sweat it! Make your best guess. Credit scores range from 300 (low) to 850 (excellent).

NMLS #3030

Tell us a bit more about you

What happens next?

A representative from Rocket Mortgage® will be in touch to discuss your commitment-free, personalized rate. Then you can decide whether you’d like to lock it in!

NMLS #3030

Enter your contact info so Rocket Mortgage® can get in touch!

By providing your contact information and clicking the "Agree & Send Information" button below, you agree to our Terms of Use and Privacy Policy. You also expressly consent by electronic signature to receive telephonic sales, promotional, marketing and other calls and text messages, including any calls and messages sent by any automated system or other means for the selection or dialing of telephone numbers, or using an artificial or prerecorded voice message when a connection is completed, from Rocket Mortgage, its Family of Companies, our partner companies and our marketing partners at the telephone number you have provided, even if that telephone number is on a corporate, state, or national do-not-call list or registry. Your consent and agreement to receive such calls or text messages is not a condition of purchasing any property, goods or services from us, our Family of Companies or any of our partners.

NMLS #3030

Being self-employed looks different for different people. There’s the hustle, the entrepreneurial leap, the layoff rebound, the career makeover and more. No matter why you’re self-employed – or what that even looks like for you – you’re probably working hard to juggle multiple responsibilities. 

But, even when things couldn’t be better financially, dips in income do happen. And when they happen, a personal loan could help cover everyday costs or unexpected expenses.

Unlike a business loan, which can only be used to pay business expenses, a personal loan is available to all kinds of self-employed people (freelancers, contract workers or small business owners), and the loans can be used for anything you need money for.

Let’s take a look at how you can get a personal loan when you’re self-employed, what types of loans you should explore and how they can help. 

Need Cash?

Applying for a personal loan has never been easier. Get the cash you need with competitive terms from Rocket LoansSM.

Checking your options won’t affect your credit score.

Understanding the Process of Getting a Loan When You’re Self-Employed

Getting a personal loan when you’re self-employed looks a lot like getting a personal loan with a full-time, salaried job. 

You can get a personal loan from most banks, credit unions and online lenders. The total amount of the loan is usually deposited into your account within a few days.

Here are the steps to getting a personal loan:

  1. Shop lenders (compare interest rates and repayment terms)
  2. Apply for a loan with a lender
  3. Provide the required information and paperwork on your finances and employment 
  4. Get approved for the loan (knock on wood!) 
  5. Give the lender your checking account number for the loan deposit
  6. Select the date you’ll start making monthly payments (if you have that option)
  7. Make your monthly payments on time and in full

Lenders will usually look at these key factors when offering a personal loan to a self-employed borrower (in descending order of importance):

  • Income 
  • Debt-to-income (DTI) ratio (monthly debt divided by monthly gross income)
  • Credit score and payment history
  • Employment history

Income: The Lender’s Perspective

Self-employed applicants should expect to show lenders additional proof of income. 

Lenders prefer to work with borrowers who can demonstrate a steady income stream. Even if you’re confident that you’ll be able to pay your monthly loan bill, many lenders might view your application as a bigger risk for default than an applicant with a predictable income. 

Now, it’s okay if your income isn’t the same amount every month. Lenders understand that being self-employed is its own animal. But they will want to see that your self-employed income has been on a steady or upward trajectory for some time. 

Income: What You Can Do

No matter how good your credit is, you’ll have to prove to lenders that they’ll get back the money you want them to lend you. 

Here are some steps that can help shore up a lender’s confidence in your ability to repay the loan:

Provide proof of income

If you’ve been self-employed for at least 2 years, submit two recent tax returns with your personal loan application. 

If you’ve been self-employed for less time than that, you’ll have to submit documentation of all the income you’ve earned since you started working for yourself. This could include copies of:

  • Checks from clients (from at least the last 2 months)
  • A tax return (if you’ve filed one)
  • Recent bank statements (showing checking deposits and savings balance)
  • Business profit and loss statements
  • Court-ordered alimony or child support you’re receiving

Show that debt isn’t an issue

No matter how much self-employed income history you can provide, it helps to have a low DTI. A DTI of 36% or less increases your odds of being approved. You can qualify with a higher DTI, but it may cost you more in interest.

Get someone to co-sign the loan

If you’re having trouble getting over the required income hump, consider recruiting a co-signer with a good credit score and steady income. The co-signer will apply for the loan with you. They should understand that by co-signing the loan they’re agreeing to pay the loan back if you can’t. 

Including a co-signer can help your chances of getting your loan application approved. Even if your income meets the lender’s requirement, they might give you a lower interest rate with a co-signer. 

Credit Score and Payment History: The Lender’s Perspective

In general, good-to-excellent credit can help you get approved for a personal loan when you’re self-employed, but your credit score isn’t as important to lenders as your income.  

However, your credit score does play a huge role in helping lenders decide how big of a loan and how low (or high) of an interest rate to give you.

Lenders will likely take a closer look at your debt repayment history than they would if you had a full-time job. Your history of repaying debts lets lenders know if you’ve been able to keep up with credit card bills or other debt payments (including other loans) – especially during the time you’ve been self-employed.

They’ll consider the following info on your credit report:

  • Types of accounts
  • Age of each account
  • Each account’s borrow limit (aka credit limit)
  • Your payment history
  • Account status for each debt
  • Your debt types (think: car loan, mortgage, student loans, etc. – lenders like debt diversity)

Credit and Payment History: What You Can Do

What you really want to have is a history of paying your bills on time. If you can afford it, it wouldn’t hurt to pay more than the minimums you’re required to pay each month.

Pro tip: Don’t close any credit accounts you’ve paid off. 

The more accounts you have open with credit you’re not using, the lower your credit utilization ratio will be. Your credit utilization ratio is the amount of credit you’ve used compared to your total available credit.

Lenders take a low ratio as a signal that you’re responsible with your debt and you manage your money well. Now, while we recommend maintaining old accounts instead of closing them, you should avoid opening too many accounts at the same time.

If you’re having trouble getting approved for a personal loan because of your credit score, don’t give up. There are a variety of ways to boost it. 

Professional History: The Lender’s Perspective

Lenders typically check employment status when deciding if they’ll give someone a loan, but they pull out the magnifying glass when that someone is self-employed. 

They want to feel confident that the borrower will be able to pay the loan back now – and for the foreseeable future. (Or for as long as the borrower is responsible for paying back the loan.) 

Career consistency can play an important role. If you’ve been self-employed in the same field or owned a business in the same industry for at least 2 years, that can give lenders a lot of confidence in you as a borrower.

Ready for a Personal Loan?

Applying through Rocket LoansSM is fast and easy.

Checking your options won’t affect your credit score.

Professional History: What You Can Do

If you’re self-employed and have been doing the same work for at least 2 years, be prepared to show lenders evidence. 

Depending on your lender, it may help your application if you can provide:

  • Invoices and documentation of payments you’ve received
  • Your business website
  • Copies of your business registration

Even if you haven’t been working very long, you can still get a personal loan. Just know that your income and creditworthiness will become even more important to your lender. 

What To Do if You’re Having Trouble Getting a Personal Loan

Calling all self-employed borrowers: You’ve got options when it comes to covering life’s expenses! 

Using collateral to secure a loan

Most personal loans are unsecured loans. (They don’t require any collateral, like a car, boat or house.) If getting an unsecured personal loan is proving difficult, consider getting a secured loan. Secured personal loans are a good option if you have a valuable asset to offer. A secured loan could help the lender get past any concerns they may have about your income. And here’s a bonus: Secured loans typically offer lower interest rates.

Alternatives to personal loans 

There may be situations when a personal loan isn’t the right solution for you. Maybe you’ve been trying to get a personal loan, but you haven’t had any luck. Maybe you need the money, like, yesterday. Or maybe the amount you need doesn’t justify going through the loan process.

There are two alternatives:

Both can be a huge help, but both carry some risk you should take into consideration. 

Because of their high interest rates and costly late fees, credit cards can create a cycle of debt that can be hard to escape.

If you’re a homeowner, borrowing against your home’s equity, whether it’s a loan or a line of credit, can be a less expensive route. But – and this is a super-important but – because your home acts as the collateral for a home equity loan or HELOC, if you miss payments, you could lose your home.

Personal Loans for the Self-Employed 

Whether you’re navigating gigs or running a small business with employees, there are lots of reasons why you might want (or need) to take out a personal loan. 

No matter the reason, a relatively low-interest injection of cash can help you stay on track with your financial goals.

An unsecured personal loan lets you borrow money with a lower interest rate than you’d be charged with a credit card. But, because you’d be putting up an asset for collateral, a secured loan would get you the lowest interest rate. 

No matter what you choose, borrowing money – and paying it back on time – can help you cover costs and add valuable payment history to your credit report.

See What You Prequalify For

Get prequalified offers for personal loans from Rocket LoansSM within seconds. Like what you see? Same-day funding is available.

Checking your options won’t affect your credit score.

The Short Version

  • Personal loans can help you pay for large purchases or unexpected bills without jeopardizing your monthly payments on other debts or expenses
  • Even if your job or work isn’t predictable, you can still get a personal loan
  • If you’ve got strong credit, it could help overcome any income instability you may have
Back to top of page

  1. U.S. Small Business Administration. “PPP loan forgiveness.” Retrieved September 2021 from https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program/ppp-loan-forgiveness

You Should Also Check Out…

Our team of financial experts write, review and verify content for accuracy and clarity.