Running your own business can be a rewarding experience. But when it comes to VA home loans, it can make the approval process a little bit tricky. But that doesn’t mean it’s impossible. Eligible self-employed veterans are able to obtain VA home loans all the time. There’s just a little bit more work involved since the process is slightly more complicated. Here’s everything you need to know.
Can I Get a VA Home Loan if I’m Self-Employed?
Absolutely. Being self-employed alone doesn’t disqualify you from being able to obtain a VA home loan. As long as you’re able to meet eligibility and income requirements, you’ll still be able to take out a VA mortgage.
VA Loan Requirements for Self-Employed Individuals
VA loan requirements are, for the most part, the same for self-employed individuals as they are for those who receive a W2 from a business. The only difference is that you’ll have to provide different documentation for your proof of income. In order to obtain a VA loan you must:
- Have satisfactory credit; credit score requirements vary from one lender to the next.
- Have sufficient income to afford your monthly payments.
- Be able to obtain a Certificate of Eligibility.
- Meet the minimum service requirements.
- Meet any other requirements mandated by your lender.
Verifying Self-Employed Income
Your lender will ask you to provide proof of your self-employed income. Requirements vary from one lender to the next, but some examples of documentation include:
- 1099’s
- Federal tax returns – business and/or individual
- Profit and loss statements
- Bank statements
Calculating Self-Employed Income
Once your lender receives these documents, they’ll take steps to calculate your self-employed income. Lenders typically want to know what your net income is. This is different than your gross income. Gross income is the total amount of income your business generates. Net income is your total income minus any losses or expenses you’ve incurred. This is important because self-employed individuals tend to have more write-offs. Your lender is going to want to know how much money you made after those expenses.
For example, if your gross income was $100,000 but you wrote off $40,000, then your net income is going to be $60,000. This is the figure that lenders will look at to determine your eligibility.
Get Pre-Approved for a VA Home Loan
Get started on your journey towards homeownership. Apply today to be pre-approved for a VA home loan or call our office to speak to a mortgage expert and get more information.
