First, you can get a mortgage if self-employed, but its not as simple as W-2 employee. You have a lot of flexibility and personal freedom associated with self-employment. It can be a great benefit to your lifestyle and your pocketbook. However, because of the somewhat unpredictable nature of self-employment, it can make acquiring a mortgage a little more difficult. If you've recently become self-employed or have been in the game for a while, here are some things you may want to consider before submitting your mortgage application. Consider these ahead of time and you won't be wondering why you will never get a mortgage if self-employed. 

Putting More Money Down

20% is often considered the magic number when it comes to the down payment. This will allow you to avoid PMI (Private Mortgage Insurance). However, if you're self-employed, you may want to consider putting even more money down. This will be an even stronger signifier to lenders that you're prepared for homeownership. Also it shows that you are in control of your finances. Your down payment will provide you with equity instantly. Additionally, if you make a higher down payment this will also lower your monthly cost. Your finances will appear even more secure from month-to-month to the lender. 

Minimizing Your Debt

The amount of debt a you have can adversely affect any mortgage application. In the event you are self-employed, a high debt load means even more money is being paid out of a salary that is not predictable. Paying off the debts you can before applying for your mortgage is a good idea. You will be able to invest that much more of your hard-earned money into your monthly payment.

A History Of Self-Employment

Being self-employed means you'll have more to prove to your lender. If you have a spotty self-employment history and long periods without bringing in any income, this will make it even more challenging. Instead of jumping into the mortgage market soon after becoming self-employed, you should try and have at least two years of success as self-employed before applying. Being able to prove a successful track record, the lender will see that you're a solid financial bet. Most lenders will not even look at your application if you have not had two years of tax returns from your self-employment.

The nature of being self-employed and the fluctuations in income that can come along with it can make a mortgage lender nervous. By following our tips above you can help lenders get comfort necessary to buy the home of your dreams. If we can be of assistance helping you buy a home or even just to refer you to a mortgage lender, contact us. We are always happy to help. We don't want you losing sleep wondering why you will never get a mortgage if self-employed.

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