Are you self-employed and trying to find a mortgage option that fits your needs? Self-employed borrowers often have a hard time finding a mortgage solution that accepts the income documentation they have. We know how hard it can be to prove self employment income on your mortgage application.
Many self-employed borrowers don’t have the traditionally required 2-years of W-2 income that accurately reflects their yearly earnings. Whether the issues arise because of business expense write-offs or because these borrowers are contract workers, these blockades can make finding a mortgage challenging and frustrating for self-employed borrowers.
The good news is that there are lenders that offer mortgage solutions specifically designed for self-employed borrowers! These mortgage options are sometimes also referred to as bank statement loans or self-employed mortgages.
Newfi specializes in Non-QM mortgages like mortgages for self-employed borrowers and offers free rate quotes or consultations here or by calling us at (888) 316-3934.
Mortgage Solutions for Self-Employed Borrowers
Self-employed people looking to purchase or refinance a home can qualify using their personal bank statements, business bank statements, or 1099’s instead of or alongside traditional W-2’s.
These self employment home loan options typically require 2-years of self-employment history to qualify.
At Newfi, we make common-sense exceptions and do all our own underwriting in-house. This means we can sometimes make exceptions for borrowers with 1-year of self-employment history, on a case-by-case basis!
How Do I Prove Self Employment Income?
Whether you’re looking for an investment property or your first home, how you prove your income is determined by how you make your money!
Depending on the lender you choose to partner with, there may be several ways to qualify for a self-employed mortgage. At Newfi, we accept the documentation that makes the most sense for you! We can qualify you using:
Personal and Business Bank Statements
Using personal or business bank statements offers self-employed borrowers the option of documenting their income using transaction history on their bank statements instead of traditional W-2’s.
A lender will evaluate the deposits and expenses on this documentation to determine your income. With Newfi, self-employed borrowers submit 12- or 24- months of personal or business bank statements to qualify depending on their situation.
Certified Public Accountant Letter
We’re also able to take a Certified Public Accountant (CPA) letter to determine self-employed income from borrowers who own 100% of their businesses and have filed tax returns for the most recent year. The CPA letter must show:
- The CPA prepared and filed the borrowers’ taxes
- The borrower owns 100% of their business
- The gross total of the business’s annual sales for the most recent year. With this method borrowers, much also provide 4 months of business bank statements that support the reported year-to-date earning receipts.
By using gross annual sales totals, not reported income after tax deductions, it allows self-employed borrowers to use more of their income to qualify.
Are You a Gig Worker or Contractor?
There is also the option to document income using 1099 income documentation. We use an expense ratio of 10% (unless provided something different) and qualify borrowers on the remaining 90% of their income.
Tax Returns (W-2’s) and Combining Multiple Sources of Income
While we know that many self-employed borrowers have tax returns that do not accurately reflect their income, some self-employed borrowers may have a co-borrower on the loan that is not self-employed, or they have may a traditional job alongside their own business.
In these cases we have options to combine income sources and use tax returns, if needed. We’re able to combine 1099’s, personal bank statements, business bank statements, and W-2’s to calculate your total income and qualify you!
Newfi’s Self-Employed Mortgage: Created for Self-Employed Borrowers!
Getting a mortgage can seem challenging if you’re self-employed, but it doesn’t have to be! Self-employed mortgage options with Newfi offer you more options for providing your income documentation, which means an easier loan process.
Interested in learning more about our mortgage options? Have questions about how our mortgage solutions can work for your unique situation? Visit newfi.com/get-started to get in contact with one of our Senior Loan Advisors today! They can walk you through how to prove self employment income on your mortgage.
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