How to Qualify for a Self Employed Mortgage

To qualify for a self employed mortgage is harder than ever right now. It seems as though the institutions that cause recessions (banks) are punishing the very people (business owners and self employed people) who keep the world running, while the employees who lost everything are still considered safer bets. Stated income loans and new cash aren't accepted. But self employed people can still prevail. Here's how to qualify for a self employed mortgage.

To qualify for a self employed mortgage, first get your papers together so the bank account representatives can't say anything to you about income. Luckily now, everything is online, so grab your tax forms from Turbotax or whoever you used, or the IRS using Form 4506T. All of these services are free, but the IRS takes 2 weeks. My rule: No more information up front than the bank needs, because they'll probably ask for it later.

Also, get together your monthly bank statements for the bank you'll be using to pay for the mortgage.

Credit report is essential. Go to annualcreditreport.com to get your federally required free credit report. freecreditreport.com (the site with the commercials and that dashing young guitar player) is a private company that will ask you for a credit card. You don't need to do that now.

Once you have your papers together, scan them into your computer and put them in a folder that you can shoot off through email at any time to any lender. Oh yes, you're going to make them compete for you, all at the same time. Don't worry about hard credit inquiries: as long as they're done within a 14 day period, many inquiries count as only one.

Now that your papers are together, to qualify for a self employed mortgage, you need to get your arguments together. As a self employed person, your income most likely doesn't come in steady, you might not have all the appropriate licenses, and you don't get your statements all clean and nice like on a payroll check. So keep good business records. Invoices, client list, referrals, references. A good thing to have is a note from prior landlords saying that you always paid rent on time, and for how long you were there. It shows stability and will put the banker's mind more at ease. Good luck!

Don't try to appeal to a banker's sentimental side when trying to get a self employed loan. To you it's a home. To them it's a real estate investment; a piece of property. The last step is to answer all questions over email, to give you time to craft easily accessible responses, again, keeping all confusing cash flow and income information to yourself. If you must answer a banker's question over the phone, keep it short, and point him back to your documentation at all times. Good luck.