Self-Employed? You May Consider This Mortgage Option

Since 2010, borrowers have been required to fully document income and assets on their mortgage applications thanks to the Dodd-Frank Wall Street Reform and Consumer Protection Act. While this does not impact W2 wage earners too much (since they can still use their gross earned income to qualify), anyone who is self-employed – from solopreneur start-ups to being the head of your own business – will have to enter the borrowing process differently.

Self-employed borrowers are required to qualify based upon their net income from their tax returns. This makes it more difficult to borrow. Reducing net income through tax deductions reflects a lower net income, making it more difficult to qualify.

However, there are still borrowing options to consider when thinking of Continuum condos for sale. Bank statement loans is a program that requires business owners to provide 12-24 months of bank statements as proof of income. Lenders will look at average monthly deposits to determine qualifying income, however, assets will still be fully documented.

In a bank statement loan requirement, borrowers are required to be self-employed for a minimum of two years. You may also be asked to show a business listing, business website, and a statement from your accounting department to verify your business and how long it has been in operation. Good credit scores will also help.

While specific loan terms will depend upon the lender, most will have an average of 10-20% down. High credit scores or larger average monthly bank statements may result in a lower down payment requirement. Assets such as 401Ks, retirement accounts, stocks, and any owned property may be factored in.

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