Self-Employed Home Loans

In this week’s blog, Professional Mortgage Solutions in Rego Park, NY is here to share tips on using home loans if you’re self-employed. Many programs offer non-traditional underwriting using less common financial documentation for people who are entrepreneurs or self-employed. Some can simply use financial statements for their business and other assets to prove their ability to re-pay a mortgage. Below we provide you with some examples, but it is always best if you can call us to hear your unique situation and get a free, no-hassle quote.

Bank Statement Loans for the Self-Employed

Bank statement loans are a great tool for the self-employed. You do not typically need to provide your tax returns or W2s to get approval. As the name implies, lenders will use a simple process of asking for bank deposits and records to determine how much income a borrower has. They run calculations off this to determine how much of a mortgage payment you can handle each month. It is useful to speak to your accountant on how to document your income in your personal and business accounts. Lenders typically ask for around 12 months of personal bank statements and 24 months of business statements. They will use formulas on this data to determine average monthly income and what amount of financing to provide. Borrowers can also ask their accounting to provide a profit and loss statement, especially if you use a single account for personal and business finances.

To qualify for a bank statement loan, you should have good or better credit (usually a score of at least 680 is required). Financing may be available for up to 90% of the home’s value, which means you’ll need to supply at least 10% or more as a down payment, depending on your financial status.

All the Perks of Using A Self-Employed Loan

There are many perks to using a self-employed loan. Many lenders are allowing the self-employed to count for “asset depletion” in their process of approval. In this process, a formula is used to review a borrower’s liquid assets and count them towards the income. Many will even provide loans without documentation of employment or income if you have enough in your stocks, bank, and retirement accounts to cover the balance of the mortgage. For self-employed borrowers, the key is to show a strong cash flow, not just a high income from employment.

Learning More About Self-Employed Loans

There are plenty of ways you can benefit from using bank statement loans, our staff are experienced and here to help. There are many solutions for borrowers who do not have a lot of traditional income documentation. Contact Professional Mortgage Solutions for more insights on using bank statement loans at our Rego Park, NY Offices.