The homeownership path can have been a difficult one for freelancers and small-business owners.
We may be able to help you realize your dream of homeownership if you have good credit and a steady income. The changing lending environment may make it more difficult to qualify for a mortgage for family business owners, serial entrepreneurs with their own businesses, or independent contractors.
Many Beverly Hills Mortgage Brokers have tightened their borrowing guidelines in response to the changing economic environment resulting from the coronavirus pandemic.
Why are self-employed people finding it more difficult to get a loan for their home than w2 employees?
Without a steady income or income tax documentation like a W-2, it may be difficult for you to prove your income. Traditional lenders have stricter rules for self-employed borrowers. Beverly Hills Mortgage Brokers will ensure that your business income is stable for at least two years.
Bottom line, it doesn’t matter if it is more difficult for other lenders or business owners to be qualified, it doesn’t make it impossible. The Funding Group is the bank of the underbanked. We take the hassle out of home financing to make it easier for all who need it.
Which income sources are acceptable to self-employed borrowers
This term self-employed borrower does not only apply to owners of multiple businesses. Possible homeowners who have difficult income documentation may include:
- Individuals who have been self-employed more than one year, but less than two years.
- Owners of small businesses or freelancers with inconsistent income
- Independent contractors or gig workers with variable income
- A person who is transitioning from a salaried position to manage a family business (provided that the business has been operating for at least two consecutive years).
- People whose businesses have had to incur extraordinary, unplanned or planned expenses that temporarily reduce their net income
The Funding Group can help you achieve homeownership if you can prove that your income is stable, ongoing, and sufficient.
What are the criteria mortgage lenders must look for in order to approve you?
Mortgage lenders take a lot into account when it comes to the qualifications of borrowers. The traditional requirements for conventional mortgages and FHA loans are not always compatible with the personal financial documents required by business owners.
Traditional lenders often require the following information to be able to properly start a loan application:
- Two years of federal income tax returns (personal or business)
- Within 10 days of closing, obtain up-to-date business bank statements. These statements confirm that revenues are consistent with the gross receipts and qualifying income appearing on tax returns.
- An annual profit and loss statement showing revenues, business expenses, and net income.
- A letter from your CPA to confirm that your business has been in existence for at least 2 years
- Credit score and credit history including three credit reports from Equifax and TransUnion.
An owner of a business or freelancer who has had a bad year and then had an excellent one could have their mortgage options shrink. Their two-year income may not reflect their true earning power. This can make it more difficult to get mortgage approval.
Student loans, credit cards and car notes, can impact your income ratio and make it difficult to get a mortgage.
The Funding Group considers all aspects of self-employment in order to provide potential homeowners with the best possible financing. The Funding Group has unique lending programs that don’t require any tax documentation or debt to income ratio (DTI).
You can become a homeowner if you have a track record of paying off debts on time.
What documentation is required to obtain a mortgage?
Home-owners who are self-employed may not be able to meet traditional documentation requirements. Borrowers are often required to provide lengthy documentation to support their financial status.
You will need to produce business tax returns, pay stubs and W-2s or a stack bank statements to prove a consistent stream of income to Fannie Mae/Freddie Mac.
This all adds up and creates a storm of problems for self-employed clients. The Funding Group is determined to change this. The Funding Group provides innovative mortgage products that help people realize their homeownership goals.
We offer breakthroughs in borrower qualification by requiring strong credit and cash reserves.
What types of loans are available to entrepreneurs and self-employed borrowers?
Although most Beverly Hills Mortgage Brokers are reluctant to accept self-employment as a source of funding, the Funding Group is proud to take on them . This sets us apart from other lenders.
Our mortgage loans are available to self-employed borrowers who use a 12-month Self Prepared Profit and Loss Statement for proof of income. No personal tax returns nor W-2s are required in order to get loan approval
Loan approval is possible without the need for personal tax returns and W-2s. Additionally, up to 100% of closing costs and down payment funds can be gifted.
We offer programs for investors and owner-occupants alike. We may be able to help you bridge the gap towards homeownership if your self-employed income is sufficient to cover your monthly payments.