Mortgage options for the self-employed borrower

Self-employed and worried about qualifying for a mortgage? It’s true there can be some extra steps involved for Conventional or other traditional mortgage programs as mentioned in recent articles but understanding what’s involved when qualifying for a mortgage can help calm related concerns.

Underwriting guidelines for Conventional, Jumbo and other mortgage programs typically look at one or two years’ tax returns (personal and business) to determine qualifying income. Depending on how a self-employed borrower files income taxes lenders generally use the net income generated from the Schedules C, E and possibly W2 earnings.

Self-employed borrowers regularly qualify using these traditional methods. However one concern some clients have is that often their actual cash flow is higher than reflected on taxes due to allowable deductions and write-offs that reduce taxable income. As long as a borrower qualifies with income as stated on tax returns and other income documentation, they can proceed with a traditional mortgage like a Conventional loan.

For borrowers who don’t qualify using traditional methods, BrandMortgage offers an exciting niche program – our 24 Month Bank Statement program. With this program the borrower’s income is calculated from the deposits into their personal bank account(s) and averaged over 24 months. This program can be a useful alternative for self-employed borrowers with credit scores at or above 700, a 20% down payment and 24 months reserves (of the new home’s mortgage payment).

If you or someone you know is self-employed and looking for a unique mortgage solution, my BrandMortgage team is ready to assist.