Yes, you can get a mortgage if you are self-employed. In general, you'll need to prove two years of income history from your self-employment with tax returns. Self-employed mortgage borrowers may qualify for conventional and backed loans. You're more likely to get approved and have favorable loan terms if you have a good credit score, have been in business for two years or more, and can demonstrate reliable income.
You may also qualify with a co-signer who has a high credit score. Mortgage lenders evaluate self-employed customers the same way they would look at others. They want to make sure you have a decent credit score. They will also look at your debt-to-income ratio (DTI) to determine if you can afford the mortgage payment associated with the loan.
Finally, lenders will review asset and income statements to verify their resources. Keep in mind that mortgage lenders only include taxable income in the amount of your home loan, which means that all those tax cancellations can worsen your loan limit. If you're self-employed but are trying to figure out how to get a mortgage without 2 years of work history, you may still be eligible for a mortgage if you have recent related experience in your field. You'll need to provide certain documentation to verify your work income and show the lender that you're eligible for a mortgage.
Whether you're self-employed or an employed borrower, having the time and space you need to prepare to apply for a mortgage will make the process faster, easier and much less stressful. Because of this, self-employed mortgage applicants generally have to meet a higher threshold of lender requirements to obtain a home loan. While Rocket Mortgage's down payment requirements don't change as a result of self-employment, some mortgage lenders may try to mitigate your risks by having you make a higher down payment, resulting in a lower loan-to-value (LTV) ratio. Regardless of your employment situation, conventional loans are often considered to be the top mortgage options that are most difficult to qualify for because you must have a higher credit score and a lower DTI than other loan options.
There is no doubt that obtaining a mortgage is more difficult for the self-employed than for traditional employees. You can also consider working with a mortgage broker, whose job is to learn the ins and outs of each lender's policies regarding loans to self-employed workers and whose relationships should help you move forward with your mortgage application.
