Traditional mortgage lending hasn’t always been kind to the self-employed. Demanding employment verifications, pay stubs and tax returns (which often don’t reflect what a self- employed person truly makes), it made the process of buying a home not just difficult — but nearly impossible — for these workers.
The few that could get a loan? They were stuck with sky-high interest rates and soaring monthly payments due to their “high-risk” profile.
Today, pushing these borrowers to the sidelines is no longer an option— especially as more and more join the self-employed workforce. Currently, a whopping 15 million Americans are self-employed, and according to the 2018 Self Employment Report from FreshBooks, another 27 million will join them in the next year.
Here at Sunray Mortgage? You can bet we’ll be here to welcome them.
The Power of Self-employed Mortgages
Self-employed Americans deserve a route to homeownership that doesn’t burden them with unfair costs or make them jump through unnecessary loopholes. They work hard for their living, and their drive and determination should be admired — not penalized.
We know it takes guts and grit for a person to strike out on their own — and it usually comes with enough struggle as it is. As lenders, we should make their journey to homeownership easier, not another roadblock or speed bump along the way.
At Sunray Mortgage, that’s just what we want to do. And it’s why we proudly offer self-employed mortgage loans — also known as bank statement loans — to help self-employed Texans both purchase properties and refinance their existing ones.
About Self-employed Mortgages
Self-employed mortgage loans don’t require the typical pay stubs, employment verifications or tax returns, like traditional loans call for. Instead, borrowers provide 12 to 24 months of bank statements, among other things, to prove they have the consistent cash flow to make their payments.
This approach is ideal for self-employed workers, who often have inconsistent income and whose tax returns typically don’t show the true amount of income they’re bringing in (due to business expenses, deductions, etc.). Self-employed mortgage loans are ideal for people like:
● Private practice attorneys and doctors
● Real estate agents and brokers
● Small business owners
● Consultants, freelancers and contractors
● Gig workers
To qualify for a self-employed loan, you’ll need to be self-employed for at least two years, so we can gauge any trends or seasonality in cash flow. In addition to your bank statements, you will also need to provide any 1099s you have received from clients, statements for any 401K or retirement accounts to your name, as well as information on assets like stocks, bonds, etc. You will also need enough cash or liquid reserves to cover a down payment, closing costs and a few months of mortgage payments. The exact amount you’ll need depends on the price of the home you’re purchasing.
As with any mortgage loan, it helps to prep your finances before applying for a self-employed mortgage. Work on paying down your debts, settle any collections efforts and report any errors on your credit report. These actions can all improve your credit score and potentially your loan options as well. You should also start saving for a down payment and closing costs. The more you can put down (and the more cash you have in reserves), the better the interest rate you’ll receive. Even a fractionally lower interest rate can mean thousands saved over the life of your loan.
Learn More About Self-employed Mortgages
If you’re self-employed and considering buying a home, investing in real estate, refinancing your existing mortgage or tapping your home equity, then read through our Guide to Self Employed Mortgages or contact a home loan expert at Sunray Mortgage today. Our self-employed mortgage loans can help you achieve your financial goals.