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What You Need to Know About a Self-Employed Mortgage

One of the underwriting standards most homebuyers face to qualify for a mortgage is to prove their income. This is relatively easy when you are an employee as you will have pay stubs to use for this purpose. It is a bit more challenging when you are self-employed as you’ll need to show a lot more paperwork to be approved for a self-employed mortgage.

A common piece of advice given by mortgage brokers is for you to plan ahead as much as possible. How you run your business might need to be different for a couple of years to improve how you “look on paper,” so to speak. In a typical self-employment situation, you work to reduce your tax liability by reinvesting in your company. You look for as many legitimate tax write-offs as you can in this instance. However, if you are looking to obtain a self-employed mortgage, you’ll want to show more income, rather than less. While you’ll have to endure the tax bite for a couple of years leading up to your home purchase, it will be worth it in the end.

Another thing to know about a self-employed mortgage is that you will likely need a larger down payment than you would as an employee. In fact, it could be considerably more. This is another reason why it isn’t a bad idea to begin planning a couple of years ahead of time.

The good news is that, with proper planning and the guidance of a mortgage broker who cares about helping you succeed, it is entirely possible to obtain a self-employed mortgage. At Donna Mullen & Associates, providing education for our clients is something we feel strongly about. We would love the opportunity to sit down with you to go over your options. You’ve worked hard to make your business a success, and we’ll work hard to make your homeownership goal a success, too!