Finding the Best Home Lender as a Self-Employed Individual

When you apply for a home loan, you’ll need to submit financial documents for your lender to review so that they can verify your income and employment status. This process is straightforward, but it can look different for someone who is self-employed versus someone who works a traditional nine-to-five job and receives a W-2. Below, we’ve provided some tips on how to find the best home lender for self-employed individuals.

Is It Difficult to Get a Home Loan when You’re Self-Employed?

Getting a home loan isn’t any more difficult for self-employed individuals than it is for those who are employed by a company. This is a common misconception. It’s not harder, it’s just different.

All the same criteria apply. You’ll need a good credit history, sufficient income, a low debt-to-income ratio, and a history of stable employment.

The major difference lies in the documentation you submit. Instead of submitting W-2s and paystubs, you’ll need to submit documents like your tax returns, bank statements, and profit-and-loss statements.

Tips for Finding the Best Home Lender as a Self-Employed Borrower

Usually, people who are self-employed are go-getters. They’re highly self-motivated. While it can be tempting to jump right in and start looking around at homes, it’s important to set yourself up for success. Before you start shopping, you’ll want to get prequalified for a mortgage. Here are some tips on how to find the best home lender when you’re self-employed:

Find a Lender that Works with Self-Employed Borrowers

This may seem obvious, but you’ll want to make sure that the lender you’re working with accepts self-employed applicants. Be upfront about your financial situation. If there are certain requirements you are not able to meet, there’s no point in taking the conversation further.

Get Referrals from Self-Employed Friends or Family

A great place to start your search is by asking around. Do you have any self-employed friends or family members who recently bought a home? If so, consider asking them what lender they used. If they had a good experience, chances are you will too.

Ask About Income & Employment Requirements

You’ll want to make sure that you can meet the lender’s requirements when it comes to submitting proof of employment and income. Do you have all the necessary documents? Do you meet their requirements for employment time length? Usually, lenders will want to see that a self-employed borrower has at least two years of consistent income. Make sure your bookkeeping is current and in good shape. You’ll also want to have your tax returns and bank statements on hand.

Get a Feel for their Customer Service

When talking to a lender, try to get a feel for their level of customer service. What services do they offer and how do they keep their customers informed? Good customer service is just as important as being able to offer a competitive rate.