My buyer is self-employed; can I get them into a home?
As a real estate professional, you are probably seeing an increasing number of buyers who are self-employed. As the loan requirements for these types of buyers are different from traditional loans, you are probably wondering if your self-employed buyer is a viable candidate to get into a home. We are here to assure you that there are many programs that exist for self-employed borrowers and you can confidently move forward with helping them find their dream home.
What should I know about self-employed borrowers?
One thing to be aware of is that the documentation that self-employed borrowers must provide to mortgage lenders is quite a bit different than what a conventional buyer must provide. One of the most popular programs allows for self-employed buyers to use their bank statements to qualify for a loan. They may be asked to provide 12 or 24 months of either their personal or business bank statements. The lender will help determine if business or personal statements should be used and will use these statements to determine an average monthly income. For more information about this program type, visit our Bank Statement Loans page.
However, bank statement loans may not be the best option for every homebuyer. Other options include allowing a buyer to use assets, 1099 forms or a verification of employment. Whatever situation your buyer is in, the right lender can identify a loan program that will help get them into a home. To view other alternative income documentation programs, visit our Other Programs page.
Will it take longer for my buyer to get a loan if they are self-employed?
Not necessarily. If your buyer is organized and can provide the proper documentation when requested, their home loan can proceed in the same timeframe as a traditional loan. It’s important to advise your buyers that because they will face different documentation requirements, they should be as prepared as possible. For tips to ensure that your buyer is prepared, have them review our For Homebuyers page for additional information.
Even though the requirements for applying for a mortgage as a self-employed individual differ from a conventional loan, it doesn’t mean that your buyer won’t be able to obtain financing or face longer loan processing times. This is why it’s important to work with a lender that has experience processing loan applications for self-employed buyers and their unique situations. Visit our pre-qualification form so that we can help match your buyer with an experienced lender that can provide them with the best mortgage for their situation.