Home Loan Solutions for Self-Employed Borrowers

Buying a home through traditional mortgage financing can be a challenge for those borrowers who don’t fit the typical income requirements. That’s why Luxury Mortgage offers a variety of unique home loan products to make financing more accessible. For self-employed home buyers, who may have a less consistent stream of income, these products may present idea solutions. In today’s post, we’ll highlight a few of these solutions for self-employed borrowers.

Bank Statement Qualifier

This innovative program is designed not just for self-employed borrowers, but for anyone who doesn’t have regular income that can be easily documented. Investors as well as self-employed borrowers may find this option especially helpful.

The program allows the borrower to qualify for a mortgage based on balances in deposit accounts rather than W-2s or tax returns. The bank accounts may be either personal or business accounts and more than one account may be used.

Other benefits of the program include the following:

• Borrow up to 80% of the property value
• Credit scores as low as 580 are acceptable
• Loan amounts available up to $3,000,000
• Competitive rates

The Bank Statement Qualifier mortgage may be used to finance the purchase of a variety of different types of housing, including 1-4 unit properties, PUDs, warrantable condos and even non-warrantable condos on a case-by-case basis.

FHA Loans

The FHA mortgage is a government-backed home loan that is quite popular among self-employed borrowers due to its lenient credit score requirements, low down payment and the ability of the borrower to use gift funds for the down payment. However, self-employed borrowers may find it a little more difficult to qualify for an FHA Loan if they have not kept good, consistent income records.

At Luxury Mortgage, we offer low money down FHA Mortgages to self-employed borrowers, provided they can supply at least two years of tax returns.

Other FHA Loan qualifications include the following:

• Address information for the past two years
• List of all real estate holdings
• Full statements (all pages) of any assets being used to qualify (checking, savings, investment accounts, etc.)
• Approximate value of personal property owned

Conventional Mortgage

Contrary to what many believe, self-employed borrowers can qualify for a conventional mortgage. In fact, Fannie Mae recently updated their guidelines for self-employed borrower scenarios, including the possibility of qualifying for a loan with only one year of tax returns instead of two. Keep in mind, different lenders may have additional guidelines on top of what Fannie Mae or Freddie Mac require, so it’s best to get as many details as possible from your lender before you consider submitting an application.

Benefits of Conventional Mortgages:

• Usually they offer lower interest rates
• May have more flexible underwriting guidelines
• Less expensive mortgage insurance when compared to FHA Loans (for those who borrower more than 80% of the property value)

Typically, lenders will be mostly concerned with the reliability and stability of your income as a self-employed borrower. As long as you can provide enough documentation to convince your lender that your income is steady enough to handle a mortgage, and you meet all other qualifying criteria, there’s no reason you can’t have a fair shot at conventional mortgage financing as a self-employed borrower.

If you would like to learn more about any of these products, or hear about other options that may work for your scenario, please don’t hesitate to contact Luxury Mortgage.