Self-employed homebuyers can still apply for a home loan with the right finance company. While such loans may not have the same requirements as employed applicants, these individuals can offer other proof of income on a self-employed status. Lenders are always looking for the financial capability to complete your loan. There are just a few different steps to take if you’re self-employed.
Read on as we outline the process of getting that mortgage using your existing financial details. It will help you find the best mortgage lenders in Texas.
Self-Employed Mortgage Requirements
Self-employed applicants usually don’t have income documents that employed people enjoy. Unfortunately, many banks and lending institutions require documents on taxable income, such as W-2 forms and other formal documents of steady income.
Lenders today have adapted to address the market for self-employed workers, entrepreneurs, and small business owners who want to apply for home loan services. Non-traditional employment uses different forms of proof of income and financial stability through other documents. In general, banks and lenders need you to provide:
- Proof of income for the last two years (bank statements)
- Details and documentation about your business or employment
- Proof of employment from clients
- Financial forecast
- Past financial and employment documents
Entrepreneurs and self-employed applicants active for less than two years must present a year’s worth of operations as proof, along with additional documents from previous jobs or businesses. Your application will still be approved when these items are combined.
Additional Tips for Successful Mortgage Approvals
You can increase your chances of getting your loan approved by improving your credit score. Banks and lenders will look into your credit history to measure your risk and success rate. It’s proof of your ability to handle debt. Most lenders will put a reasonable credit score ceiling for self-employed applicants.
A high credit score doesn’t involve your income but your ability to complete loans. You can maintain a decent score by completing your loan payments on time and avoiding penalties.
Your credit utilization rate must also be lower, which means you’re borrowing much less than your approved credit limit. One helpful way to keep it lower is by using a different credit card or line of credit for business expenses, which will show lower credit utilization on your credit card.
The lender may also check your debt to income ratio, which is the amount of money from your income allocated to paying debts. It may affect your application despite making the cut on credit score and income capability. Remember to clear major debts and repayments before you apply for home loans.
Lending companies are opening up to self-employed home loan applicants. While self-employed persons have different documents and proof of income from regular employees, these can be accepted as long as they comply with lenders’ requirements. The main goal is to provide steady proof of income that guarantees you can complete the whole mortgage.
If you’re looking for the best mortgage lenders in Texas, Global Key Capital is your best option. You can take your home finance application to us if you’re an entrepreneur or a self-employed worker. We will help you get that dream home you deserve with a customized mortgage loan that fits you. Call us today.