Ever since the 2008 financial meltdown and real estate crisis, banks have made some dramatic changes to their lending policies. That’s making it harder for the self-employed to secure a mortgage. If you own a company and are in the market for a home, here are a few ways to ease the process and boost your chances of getting the loan.

  1. History. If your business hasn’t been around for at least two years, securing a mortgage is going to be difficult. Self-employed borrowers used to be able to depend on stated-income mortgages – loans made without tax documents or bank records to verify income levels – but those days are gone. Lenders want proof of stability before considering adding you to the books. They look for a pattern that justifies the decision they’re going to make.  They want to be sure the borrower will be able to handle the payment over time. If someone is just starting a business, that could be problematic.
  2. Documentation. Stated-income loans are things of the past, so you will need to document every penny you make. Every bank has its own requirements, so find out what they are before formally applying for the loan.
  3. Don’t call us. Online and telephone-based lending programs are convenient. But because they’re remote, you don’t have much wiggle room. When you decide to apply for the loan, go to your bank in person and meet with a mortgage loan officer who specializes in loans for the self-employed.
  4. Tax facts. One of the advantages of self-employment is the wide range of things you can deduct from your taxes. However, driving down taxable income with those deductions may make it more difficult to secure a mortgage.
  5. Have money. Being liquid is never a bad thing when you’re applying for a mortgage, but it’s even more crucial when you’re running a business. Self-employment generally causes income levels to fluctuate from year to year, and banks want to be sure you can cover the bills in lean times.
  6. Get a co-signer. Don’t yet have two years of records under your wing, but still ready to buy? A qualified co-signer can help secure a loan. However, make sure the prospective co-signer has his or her own finances in tip-top condition.

Related posts:

  1. Jumbo Mortgages
  2. Bankruptcy and Mortgages
  3. Energy Efficient Mortgages
  4. Pre-Approved Mortgages and It’s Benefits
  5. No-Closing-Cost Mortgages