Confirm that you have your high school diploma or equivalent GED certification. To be an independent mortgage broker, you must have your high school diploma. Most mortgage lenders require at least two years of self-employment before they can qualify for a home loan. Lenders define a “self-employed person” as a borrower who has an ownership interest of 25% or more in a company, or one who is not a W-2 employee.
If you've just started your business, you'll have to wait your time before applying for a mortgage. Generally, lenders want to see two or more years of stable self-employment. You may be able to get by with just one year in business if you worked at least one more year in the same field and earned at least what you earn now. Mortgage lenders evaluate self-employed customers the same way they would look at anyone else.
They want to see that 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. Self-employed mortgage borrowers may qualify for conventional and government-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 show reliable income. You may also qualify with a co-signer who has a high credit score. Most banks, credit unions, and large mortgage lenders don't offer loans with bank statements because they don't conform to existing Consumer Financial Protection Office (QM) rules. The fewer monthly debt payments you have when you start the mortgage process for the self-employed, the easier it will be for you to make your mortgage payments.
When you apply for a self-employed mortgage in California, you'll need to prove that you have the down payment, fees, and enough money in the bank to reserve for future mortgage payments. As a highly trained mortgage veteran for 40 years, I have financed thousands of borrowers with cutting-edge home loan products. 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. Mortgage brokers have a wide network of wholesale lenders they work with and they know exactly who offers self-employed loans, what their requirements are, and who is the best option to get the mortgage you need to refinance or buy a home.
Keep in mind that FHA loans come with other significant costs, including a large initial mortgage insurance premium, so keep this as a backup option if you can't get approval for a conventional mortgage for self-employed workers. 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. 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. A broker who has a history of working with freelancers can more easily guide you through the process and save you the legwork.
Some lenders may worry that they won't earn a stable enough income to make their monthly mortgage payments, and others may simply not want to deal with the additional paperwork that may involve granting a mortgage to a self-employed person. For more than 25 years, HomeLife Mortgage has earned a strong reputation in California and Florida as a leading mortgage broker, serving the needs of borrowers who have been unable to obtain conventional financing. Self-employed mortgage borrowers can apply for the same loans “traditionally employed borrowers.”. Obtaining a joint mortgage with a co-borrower who is an employee with Form W-2, such as a partner, spouse, or trusted friend who will share ownership of your home, is another way to improve your prospects of getting approved for a mortgage if you are self-employed.
Because of this, self-employed mortgage applicants generally have to meet a higher threshold of lender requirements to obtain a home loan. . .