Ever wonder if self-employed people have trouble qualifying for a home loan? In our ever-changing US economy, there are more and more professionals striking out on their own as a self-employed freelancer or contract worker. Texas is FULL of self-employed people with about 10% of the population being self-employed.
While this is positive for those who want the freedom and flexibility of the “work for myself” lifestyle, it can make it difficult to qualify for a mortgage. But there are options for you!
Here are 2 options for Freelance or Self-employed professionals that want to qualify for a home Loan:
1. Conventional Loan
To qualify for a Conventional Loan as a freelancer, you will need to show proof of 2 years in that role, as well as produce tax returns for your work for the last 2 years. The mortgage company will then look at your NET income to determine your monthly income to qualify for a home. This is the easiest way to get qualified — 2 years of strong income on the tax returns.
However, what about those that either write off a significant amount of income or are newly self-employed? There’s another option still!
2. Bank Statement Loans
Here at Sunray, we specialize in the this scenario by helping freelancers in Texas qualify for a home loan with a loan product called a Bank Statement Loan.
A Bank Statement Loan is simply a home loan that analyzes your bank statements instead of their tax returns to determine their ability to repay the loan. Pretty cool, huh?
Sunray Mortgage can look at either the last 12 months of personal statements or 12 months of your company’s bank statements, whichever is more advantageous for you.
This allows us to show that you have consistent deposits from your work and to prove that you can repay the loan. This is great for many freelancers who are either writing off a significant amount of their income, or do not have a 2-year history yet.
With these loans, you will typically see a higher interest rate than you would on a conventional loan. However, what we suggest to our Texas borrowers is that you qualify with this bank statement loan until you have a 2-year history with your freelance work, then get a refinance loan into a Conventional Loan with a lower interest rate.
This not only allows you to get the house you want now, but also gives you a clear path to reduce the interest rate and payment in the future.
As you can see, Bank Statement Loans are great options for self-employed or freelance professionals in Texas.
Speak to your Sunray Mortgage professional to determine if a Bank Statement Loan is right for you, and start your quick quote process today.