Applying for a Mortgage:

Challenges for Self-Employed

Buyers
City Creek Mortgage
11910 South State Street,
Suite 100 Draper,
UT 84020
801.501.7950

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When it comes to mortgage application, self-employment makes the process more complicated. As
self-employed individuals do not receive a regular paycheck, lending companies consider them as
high risk. While it is not impossible to get a home loan when self-employed, it involves advanced
planning and longer preparation.
Not the True Income
Although many self-employed individuals earn a good living, they find it hard to qualify for home
loans. Borrowers usually need to provide two years worth of tax returns, which do not accurately
reflect their true income. This is because when loan underwriters use tax return as proof of income,
they actually see deducted tax expenses. They see much lower figures than what the person actually
takes home. This could decrease the amount that the buyer can qualify for, or result in rejection.

Longer Preparation
Mortgage lenders recommend preparing longer than most buyers do before purchasing a home.
Self-employed buyers can benefit from cleaning up their financial affairs so that their business will
not mix with their personal funds. It is also best to provide mortgage lenders with solid references or
people who can guarantee their financial stability.
Good Credit Score
A solid credit score is always important when applying for a home loan, but even more so for selfemployed buyers. A good score reflects how the person manages personal finances, which is
important in becoming an ideal mortgage candidate. If the borrowers credit score is not in great
shape, it is best to wait to get it back on track.

More Money Down

To win the approval of the mortgage lender, selfemployed buyers need to put more money down.
The chances will be higher by paying at least 20 per
cent or more in the down payment. It is also
advisable to look for properties that do not have
extra payment for things such as maintenance and a
homeowners association.

Self-employed individuals who are considering

buying a home need to talk to trusted lenders to
know the options available and preparations needed.
While it is possible to get a mortgage, it still
important to fully understand the application process
and requirements to avoid surprises.

RESOURCES:
CityCreekMortgage http://www.citycreekmortgage.com

Usnews.com
http://money.usnews.com/money/personal-finance/articles/2013/01/15/how-to-play-themortgage-game-if-youre-self-employed

MortgageCalculator.com
http://www.mortgagecalculator.org/helpful-advice/mortgage-qualifications.php