Loan Advice for Self-Employed Workers

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For a more in-depth analysis to help you get a loan if you're self-employed view this great article. 

I recently received a very good question from a client, so today I am going to be speaking about how you can qualify for a loan if you're self employed. There are several reasons why it's harder for self-employed individuals to get mortgage loans.

1. Lending standards have simply gotten tougher. Ever since the market crashed a few years ago, it has been tougher to get approved for a loan.
2. There's a fine line to what you as a business owner report to the IRS for taxation purposes, and what you as an individual report as income so a mortgage lender can help qualify you for a loan. Self-employed individuals have a lot of expenses, and that reduces your income, which the IRS uses to calculate your taxes. 
3. You may not bring in revenue during your first year of business. This will cause issues when mortgage lenders require a 24-month average to calculate your income. This could create problems in reaching the standard income requirement if you have negative income one year. The most important thing here is to ensure that your income increases year-over-year.

The best advice I can offer to self-employed business owners trying to qualify for a loan is to speak with a mortgage lending professional such as myself, The Mortgage Doctor. We can discuss how you’re specific situation affects your ability to qualify for a mortgage. 

Please contact me with any questions you might have. I'm always willing to speak with you!

Information and/or data is subject to change without notice. This is not a commitment to lend or extend credit. All loans are subject to credit approval including credit worthiness, insurability, and ability to provide acceptable collateral. Not all loans or products are available in all states or counties.  ENG Lending and Bank of England are not affiliated with any government agency. ENG Lending is a division of Bank of England. NMLS 418481. Member FDIC.