Getting a Home Loan if You are Self-Employed (367 words)
Applying for a home loan when you are self-employed can be a bit of trial for some, as you will have to provide a different kind of proof of income. This will vary from state to state, and different loan offices and banks.
Employed people will have previous tax returns and w-2 forms, whereas the self-employed person(s) will have to provide a 1099 form, W-2 Employees who are 100 percent commissioned, or Convert from a self-employed to a W-2 employee in some instances.
It will be much easier to get the financing you need, if you have been self-employed for more than two years. For less than two years, it can be much harder but not impossible.
There are different ways to get a loan if you wish to try different options of obtaining a loan.
Low Document or No Document loans are available for this type of financing, but not widely known. (check to see if they are available in your state) These are usually listed as private lenders or collateral lenders. You may find them in the financial listings or in some business publications.
These Low/No Document loans are not regulated by the government, so you will have to research them carefully. The terms, rates, and fees may differ in each one, as well as, in each state.
Collateral lenders and private lenders want to know what type of credit and asset verification you have. Collateral lenders may want a larger down payment or higher interest rate to create more of an equity for the home, to cover any foreclosure expenses.
Asset verification also includes bank accounts, life insurance plans, or anything with cash value. Credit scores are exceptionally important. Most loan companies would like to see a credit score of 720 or better.
Two other options is to go with either Stated Income Home Loans (if available in your state) or assume a mortgage from someone else. (You can check with Real Estate Investors in your area to find a home owner that is willing to do that.) You will still have to provide income verification, but it may be easier to obtain a home this way.
Applying for a home loan when you are self-employed can be a bit of trial for some, as you will have to provide a different kind of proof of income. This will vary from state to state, and different loan offices and banks.
Employed people will have previous tax returns and w-2 forms, whereas the self-employed person(s) will have to provide a 1099 form, W-2 Employees who are 100 percent commissioned, or Convert from a self-employed to a W-2 employee in some instances.
It will be much easier to get the financing you need, if you have been self-employed for more than two years. For less than two years, it can be much harder but not impossible.
There are different ways to get a loan if you wish to try different options of obtaining a loan.
Low Document or No Document loans are available for this type of financing, but not widely known. (check to see if they are available in your state) These are usually listed as private lenders or collateral lenders. You may find them in the financial listings or in some business publications.
These Low/No Document loans are not regulated by the government, so you will have to research them carefully. The terms, rates, and fees may differ in each one, as well as, in each state.
Collateral lenders and private lenders want to know what type of credit and asset verification you have. Collateral lenders may want a larger down payment or higher interest rate to create more of an equity for the home, to cover any foreclosure expenses.
Asset verification also includes bank accounts, life insurance plans, or anything with cash value. Credit scores are exceptionally important. Most loan companies would like to see a credit score of 720 or better.
Two other options is to go with either Stated Income Home Loans (if available in your state) or assume a mortgage from someone else. (You can check with Real Estate Investors in your area to find a home owner that is willing to do that.) You will still have to provide income verification, but it may be easier to obtain a home this way.