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How To Get a Mortgage When You’re a Self-Employed Home Buyer


What You Need To Know

  • Qualifying for a mortgage while you’re self-employed may create certain challenges, but it’s still very possible
  • You’ll need to prove you have a stable income and that your business is strong and viable for the future
  • You’ll typically need to be in business for at least 1 year to apply for a mortgage, but lenders often prefer 2 years of business history


Buying a home is exciting. But no matter who you are, the mortgage process can feel stressful – especially when you’re self-employed. 

As of June 2022, approximately 16 million people in the U.S. are self-employed with incorporated and unincorporated businesses, according to the U.S. Bureau of Labor Statistics.[1]

If you’re self-employed, no one’s going to penalize you for your entrepreneurial spirit. But you may face a few more hurdles than a salaried or full-time employee to qualify for a mortgage loan. 

So have no fear. We’ll show you what you need to qualify for a mortgage while you’re self-employed.

Ways to Qualify for a Mortgage Loan When You’re Self-Employed

Qualifying for a mortgage while you’re self-employed may create certain challenges, but it’s still very possible.

If you’re a self-employed person who wants to secure a mortgage or bank statement loan, you’ll need to prove you have a stable income and that your business is strong and viable for the future. You’ll need to show what your business is and where it’s located or operates. You’ll also need to give the lender (or loan officer) all sorts of documentation – the more, the better. 

Here’s what a lender will typically need to know to qualify you for a mortgage:

Is your income coming in?

People often wonder how to prove their income when they’re self-employed. Frankly, you’ll need documentation that demonstrates money is coming in and isn’t just theoretical. 

Consistency is key. You may have heard that before, and when it comes to getting a mortgage as a self-employed borrower, it rings true.

You’ll typically need to be in business for at least 1 year to apply for a mortgage, but lenders often prefer 2 years of business history.

  • If your business has been active for 1 year or less: In addition to providing proof of income and business viability, you’ll need to include your most recent previous employment.
  • If your business has been active for 2 years: You won’t need to verify employment beyond your current business, but you’ll still need to provide documents proving your business’s profitability and your income.

What is the strength of your business?

It’s great to believe in the potential of your business. But a strong belief isn’t going to pay the bills. 

If you hope to obtain a mortgage while self-employed, you’ll need to show that your business has consistently made money in the past, is making money right now and is well-positioned to make more money for years to come.

Providing basic business documents will demonstrate profitability. Additionally, any contracts you have will help strengthen your case. Did you recently sign a major contract with a new client? If so, be sure to let your lender know.

What documents do you need for a self-employed mortgage?

Unlike employees who can verify their income and employment through their company, self-employed individuals usually need to provide documentation proving the viability of their business and income, such as:

  • Proof of a personal business accountant (if applicable)
  • 1 – 2 years of business tax returns
  • Current contracts, client testimonials
  • Any relevant business licenses (such as a DBA)
  • Business bank statements
  • Profit and loss statements (Schedule C, Form 1120-S, Schedule K-1), cash flow

The paperwork you need to present will vary by lender. Some will require you to prove future contracts, while others might accept a basic income statement or tax returns. 

Additionally, some lenders might be willing to give you a self-employed mortgage, but they might charge a higher interest rate if you’re unable to verify your income. This is why self-employed people should, generally, explore multiple mortgage providers.

Tips to Help You Get the Best Self-Employed Mortgage Loan

As you probably could’ve guessed, your finances play a key role in a lender’s decision to give you a mortgage. 

We’ve broken down three of the biggest variables a lender considers before giving you a loan. 

Put it all on the table: your assets

To prove your “mortgage worthiness,” you’ll have to make a list of all assets you currently hold. You’ll also need to verify your self-employed income, which can usually be done with 1 – 2 years of tax returns – this will be the income you’ve earned after all expenses and liabilities have been paid.

Creating a list of verifiable assets allows the lender to calculate your net worth (that’s your assets minus your liabilities). The higher your net worth, the greater your chance of getting a mortgage. Though this is true whether you’re self-employed or not, it has extra importance if you’re self-employed.

Here are some examples of assets you’ll want to have for your loan application:

  • Bank statements: Checking and savings accounts
  • Stocks, bonds, mutual funds
  • 401(k) and other retirement accounts
  • Real estate or property
  • Other sources of income

What is your debt-to-income (DTI) ratio?

One of the first things a lender looks at for self-employed applicants is their DTI ratio. It’s a way to compare how much you owe against how much you earn.

If you’re a self-employed business owner, you know your income can vary month to month. So it’s important to show a lender your average DTI ratio over the past 1 – 2 years.

Knowing your DTI ratio before filling out a mortgage application can let you know if you qualify for a loan. Lenders prefer a DTI ratio of 36% or less for a conventional mortgage. For alternative loan options, like a Federal Housing Administration (FHA) loan, a DTI ratio of up to 50% may be acceptable.

What credit score do you have?

Few things in life are certain. Your credit history affecting your mortgage loan prospects is one of them.

Your credit report gives lenders a snapshot of how much you owe compared to how much you can borrow. It also shows how responsible you are when you’re paying back debts. 

While most lenders will consider a mortgage application with a good credit score of 620 or higher,[2] if you’re self-employed, you’ll probably want a score of 680 or higher.

Also, the better your credit score, the better the interest rate you can qualify for.

Separate business from personal

One of the perks of being self-employed is that you can write off business expenses and save money on taxes. That perk can become a liability when you’re trying to buy a home. 

Lenders will look at your income after the write-offs. If you write off a lot of business expenses, it will make your taxable income appear lower — and could lower your chances of getting a loan.

If you’re considering buying a house, you may wish to write off fewer expenses for at least 1 – 2 years before you start home shopping. This way you can show increased income.

Another good practice is to use separate credit cards for business and personal expenses so you don’t inflate your credit utilization.

How does a larger down payment help secure a mortgage?

If you’re self-employed, the lender wants to feel confident you have the resources to repay the loan and make each monthly payment.

One of the best ways to ease a lender’s concerns is to make a larger down payment (20% or more of your home’s purchase price). 

This gives the lender added confidence that you’ll be able to pay the loan back and has the added benefit of reducing the overall amount you’ll need to borrow.

One Size Doesn’t Fit All: Explore Other Mortgage Options for Self-Employed Borrowers

Despite your best efforts, there’s always a chance that a conventional mortgage application won’t be approved. 

But don’t stress over it. Conventional loans aren’t the only option. 

There are alternative home loan programs:

Get a co-signer

Beyond the variety of mortgage options available, you can also get a co-signer for your mortgage. 

A co-signer can be a parent or relative in a stronger financial position. Make sure both you and your co-signer understand that if you default on the loan, the co-signer will be on the hook to repay it.

Consider a mortgage broker

If you’d rather focus on your business and not on researching mortgages, you may want to consider a mortgage broker. Look for brokers who have experience working with self-employed borrowers.

If You Build It, a Lender Will Come

Ultimately, you can be self-employed and get a mortgage. However, you’ll undoubtedly need to prove you can make payments into the perpetual future. The key is to be prepared, especially when it comes to meeting extra documentation requirements.

Before running to a lender and filling out a mortgage application, ask yourself these questions:

  • Have I been in business for at least 1 year?
  • Are my business and personal expenses separated?
  • Do I have all the necessary documents to prove that my income and business are stable?
  • Is my DTI 50% or lower?
  • Do I have the preferred credit score?

If you answered no to any of these questions, you may want to speak to a lender about alternative loan options and strategies to improve your application in the future.

Remember, financial situations are fluid. Where you are today may not be where you are tomorrow.

  1. Bureau of Labor Statistics. “Data Retrieval: Labor Force Statistics (CPS).” Retrieved July 2022 from

  2. Fannie Mae. “Selling Guide.” Retrieved July 2022 from


In Case You Missed It

  1. Important documents you’ll need to present include 2 or more years of personal and business tax returns, profit and loss statements and possibly a balance sheet

  2. Separating your business and personal expenses will show lenders you have a higher income – increasing your chances of getting a mortgage

  3. A larger down payment can give lenders confidence that you’ll make your monthly mortgage payments and helps you qualify for a lower mortgage rate

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