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How To Get a Mortgage When You’re Self-Employed (2021)

Being self-employed and getting a mortgage can be a little more difficult than a W-2 employee. Mortgage lenders will require more documents and attention to detail when working with self-employed buyers. In this article, we will go over everything you need to know about self-employed mortgages and how to qualify. Let’s begin.

Self-Employed Mortgage Requirements

Working for yourself means you have to stay organized to keep track of your income. This will be beneficial to you when it’s time to apply for a mortgage. So what exactly are the requirements for self-employed mortgages in 2021?

  • Driver’s license

  • State or business license under your company name

  • Self employed for a minimum of 2 years

  • Can show a flow of money coming into your bank for 12-24 months

  • Last 3 bank statements

  • Personal and business tax returns from the last 2 years (all schedules)

So what happens if you’ve been self-employed for less than two years? Well, your business must be active for a minimum of 12 consecutive months and your most recent two years of employment (including before being self-employed) must be verified.

Credit Score Requirements for a Self Employed Mortgage

Credit score requirements vary based on lender. The most common metric lenders use will be your FICO score to evaluate your risk as a borrower. Most will look for credit scores that are average or higher which can be around the 600’s. Credit scores are a big factor when it comes to interest rates and approving the mortgage. Here’s a typical way lenders will grade your credit score:

  • Exceptional: 800-850

  • Very Good: 740-799

  • Good: 670- 739

  • Fair: 580- 669

  • Poor: 300- 579

Tips to Prepare for a Self Employed Mortgage

Consider these steps in advance of applying for a loan if you’re self employed.

  • Get your credit score as high as possible. Since there is no specific credit score requirement, you still want a high score because this will impact your interest rate.

  • Begin saving for a down payment. Most mortgage loans will require anywhere between 3%- 20% depending on your credit score.

  • Deposit all business income into your bank accounts. Self employed lenders will ask for bank statements so they can see your deposits. The deposits will be used as your income on your mortgage application.

Speak with a local mortgage lender. Have open ears and consult with a local mortgage lender to know what’s required and how to best prepare to get an exceptional mortgage loan.

Self Employed Mortgage Related Questions

How long do you have to be self-employed to get a mortgage?

Two years will be the minimum. There are some options now for those who have just started their business and do not have two years of history.

Is it harder to get a mortgage if you’re self-employed?

It can be harder if you aren’t prepared ahead of time. Have your documents in order and keep track of your money flowing.

What is a self employed mortgage advisor?

A self employed mortgage advisor will guide you throughout the process to prepare you in advance of applying for a mortgage. They will help you identify the documents needed to apply for a self employed mortgage.

Have any self employed mortgage questions that we didn't answer on this article? Set up an appointment to chat with us directly. We are happily serving all of Florida, California, Georgia, North Carolina, South Carolina, Tennessee, and Texas. Click here to schedule a call! Follow us on Instagram for daily mortgage tips and tricks.

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