What You Need to Get a Mortgage
Self-employed individuals, independent contractors, and freelancers have a harder time obtaining a mortgage following the credit crunch, but it’s still feasible. Find out how to acquire the best mortgage for your situation with us at Dartford Mortgage Centre if you are self-employed, want to purchase a new house, or are wanting to refinance. First-time buyers and current homeowners have found it increasingly difficult to obtain a mortgage over the past few years, but the self-employed have been particularly hard hit.
- accounts for two years
- a bookkeeper
- Regular work history and a sizeable deposit
- excellent credit standing
Can You Get a Mortgage?
Yes, you can get a mortgage if you’re self-employed. In general, you’ll need to prove two years of income history from your self-employment with tax returns.
Is It Harder to Get a Mortgage?
Yes, it can be harder to get a mortgage if you’re self-employed. You’ll need to provide more documentation than someone who has had the same W-2 employment for several years. Some lenders do not work with self-employed individuals because of the increased underwriting requirements.
How Much Income History Do I Need ?
The longer you can prove income history for self-employment in the same industry, the more likely you are to be approved for a mortgage. As a general rule, you’ll want to have at least two years of documented self-employment income at or above the level you need to afford the loan you want.
Are Self-Employed Mortgages More Expensive?
Not necessarily. Make sure you’re getting the best deal possible by getting pre-approved quotes from multiple lenders and comparing loan estimates.
The Bottom Line
If a W-2 employee loses a job, their income will drop to zero in the blink of an eye in the absence of unemployment insurance (UI) benefits. Those who are self-employed often have multiple clients and are unlikely to lose all of them at once, giving them more job security than is commonly perceived.
Of course, self-employed individuals are already used to having to work extra hard to file additional tax forms, secure business licenses, get new clients, and keep the business running. Armed with a little knowledge and patience, they can also find ways to qualify for a self-employed mortgage.