Here is a detailed post with tips for self-employed individuals seeking mortgages, along with 10 relevant hashtags and no emojis:
As a self-employed person, securing a mortgage requires more documentation than traditional W-2 employees. Lenders want to see your tax returns, typically the past 2 years, to calculate your qualifying income based on averaged net profits.
To avoid surprises that could jeopardize your mortgage approval, ensure all of your past tax returns are filed and up-to-date. Lenders require the most recent filings.
Additionally, any outstanding tax balances must be resolved before closing. Set up a payment plan with the IRS/state if you can’t pay in full. Under $50K IRS balances allow streamlined installment agreements.
Consider a “no tax return” mortgage program if your taxable income doesn’t reflect your true earnings and ability to afford payments. However, these loans come with higher interest rate premiums.
The ideal route is a “fully documented” loan where you provide tax transcripts showing maximized but legitimate business deductions. This qualifies you for the best rates while staying compliant.
No matter which mortgage program fits your situation, the key is proactive tax planning as a self-employed borrower. Don’t let unfiled returns, unexpected balances, or improperly deducted expenses derail your home purchase. Work with a CPA beforehand.
Upfront preparation and transparency with lenders regarding your self-employment pays off in the long run during the mortgage process!
