A Mortgage Application Guide for the Self-Employed


September 7, 2021

While there is no special mortgage application process for people who are self-employed, freelancers and independent contractors face some unique challenges when applying for a home loan. Proving that you earn a reliable and consistent income can be challenging when your business varies from month to month. In order to convince hesitant lenders to hand over a loan, you may need to take a few steps to make yourself a more attractive borrower. 

When you’re ready to start house hunting, work with a great real estate team like Red Door Realty Group. Your real estate professional will help you navigate your mortgage options and find the perfect home within your budget!

Pay Down Debt

Improving your credit score and debt-to-income ratio will show your lender that you are well-positioned to take on a major loan.

  • Learn how to improve your business cash flow and start paying down debt aggressively.
  • Besides paying off debt, try other methods to boost your credit score.
  • Look for ways to bring in more income, like finding higher-paying clients or launching a side gig.

Save for a Larger Down Payment

Moneylenders may be more willing to work with you if you can offer larger down payment and borrow a smaller percentage of the home sale price.

  • Try a variety of different methods to reduce your business expenses.
  • Learn how to start an LLC in Florida so you can save money on your business taxes.
  • Be careful when claiming business expenses on your taxes. Reducing your taxable income too significantly may hurt your chances of getting a home loan.

Consider Your Mortgage Options

Certain mortgage types may be more attainable than others. Consider mortgage options like conventional loans, FHA loans, and bank statement loans.

  • FHA loans are easier to qualify than conventional mortgages.
  • If you have a high credit score and enough money saved to make a large down payment, a conventional mortgage may be right for you. 
  • Bank-statement loans, also called self-employed mortgages, let you provide a bank statement rather than tax returns to qualify. 
  • You may also consider getting a family member to co-sign on your loan. 

Being self-employed shouldn’t stop you from owning your dream home. If you’re planning on buying a property in the near future, start planning for your mortgage application as soon as possible! The earlier you begin saving for a down payment, improving your credit score, and securing a reliable record of your self-employment earnings, the better!

Are you looking for a home in the Jacksonville, Florida area? Red Door Realty Group can help you find the perfect property and navigate your mortgage options. Contact us today! 904-996-0000.