First-Person: How to Purchase a Home as a Self-Employed Worker

It IS possible to purchase a home if you are self-employed, you just need to go about things in a different manner than other workers. We recently bought another home, and I had to prove my self-employed income. This is possible, but banks require lots of documentation before they will approve your mortgage. I personally took in a folder of supporting documents that ended up being over an inch thick, in order to prove to the mortgage underwriters that I was a worthy candidate for a mortgage. I was approved for a nice sum, and bought a fabulous house, which made all the work worth it.

Bank Statements

First, print off your bank statements for the last year at least. You need to collect bank statements from both your personal checking and savings accounts, and your business accounts, so the bank can see that you have adequate income flowing through your accounts.

Tax Records

Pull out your tax records from the last three years, for both your business and personal taxes. This is additional proof of income and will show the bank or mortgage company that you do indeed have enough income to support a home and mortgage payments.

Paypal Print-Outs

If you receive pay from any clients via Paypal, print out your Paypal records for the last twelve months. Many clients have turned to Paypal as a quick, easy way to pay freelancers and independent contractors. Print out these records to show the income you have coming from these types of clients.

Client Documentation

Print out any invoices, copies of checks, statements or other documents provided by clients. This is another way to prove income and show the bank how much you have coming in and when. Any documentation that you can come up with is always helpful. And bring your records from at least the last year.

Credit

Whether you are self-employed or not, this goes without saying. Keep your credit report clean and clear of any delinquencies, defaults, or bankruptcies. A good credit report goes a long way in helping you secure a mortgage. Banks and mortgage lenders will not loan money to potential borrowers who have bad credit.

Other Documentation

Any documents you have that can help prove income, such as rent or lease payment receipts or other financial documents can be helpful when proving your loan-worthiness to a lending institution. Present this at your appointment with your loan officer.

It is possible for self-employed workers to obtain mortgage loans to purchase a home. You must keep good records on every aspect of your finances and remember to take them to your loan officer at your initial appointment. Good business and personal records can mean the difference between buying the home of your dreams, and renting forever. Good luck!