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Running a successful business is no small accomplishment. However, when it comes to securing financing for a home, self-employed individuals often face unique challenges. Being told you don’t qualify because of your tax returns can be frustrating, especially when you know your cash flow and business financials support your ability to buy a home.
The primary issue self-employed borrowers face is the difference between their taxable income and actual cash flow. Your C.P.A. might maximize tax benefits, which can inadvertently reduce your reported income, affecting your mortgage qualification. Traditional banks may not always recognize the full scope of your financial health based on these tax returns alone.
Despite these challenges, there are several ways to secure a mortgage:
Alternative Documentation: Some lenders accept alternative documentation, such as bank statements, profit and loss statements, and asset documentation, to demonstrate your income.
Specialized Loan Programs: Certain conventional and non-conventional loan programs cater specifically to self-employed individuals. These programs might require different types of documentation and can be more flexible.
Higher Down Payments: Increasing your down payment can reduce the lender’s risk, making it easier to qualify for a mortgage.
Improving Credit Scores: Ensuring a strong credit score can significantly impact your ability to get approved. Paying down debts and maintaining a low credit utilization ratio are crucial steps.
As mortgage brokers, we have a fiduciary responsibility to find loan programs that best fit your unique situation. We understand the intricacies of self-employment income and work with speciazed lenders who offer specialized programs for self-employed borrowers. Even if traditional banks have turned you down, there are still viable options available. Moreso, you will be working with someone who can relate to your situation given our experience level and understanding of the most complicated business structures.
Reach out to us today, and let’s discuss how we can help you secure the mortgage you need to purchase your dream home. We’ve successfully helped many self-employed individuals overcome these challenges and achieve homeownership. Securing a mortgage when you are self-employed requires understanding and navigating unique financial hurdles. By exploring alternative documentation, specialized loan programs, and working with a knowledgeable mortgage broker, self-employed borrowers can find the right path to homeownership.
Licensed in Colorado as Maestro LLC (DBA Mortgage Maestro Group) is an Equal Housing Lender.
Consumers wishing to file a complaint against a company or a residential Mortgage loan originator should complete and send a complaint form to the Texas department of savings and mortgage lending, 2601 North Lamar, suite 201, Austin, Texas 78705. Complaint forms and instructions may be obtained from the Department’s website at www.sml.texas.gov. A toll-free consumer hotline is available at 1-877-276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed residential mortgage loan originators. A written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department’s website at www.sml.texas.gov.
Home Mortgage Disclosure Act Notice. The HMDA data about our residential mortgage lending are available online for review. The data show geographic distribution of loans and applications; ethnicity, race, sex, age and income of applicants and borrowers; and information about loan approvals and denials. HMDA data for many other financial institutions are also available online. For more information, visit the Consumer Financial Protection Bureau’s website.
