Are you self-employed and you would like to purchase a house? You’ll need to qualify for a mortgage first, which can be a little trickier process than usual. Although the process can be more difficult than for others, self-employed people can obtain mortgages as well. Here are some things you’ll need to know in order to qualify for a mortgage if you’re self-employed:
Your Last Two Tax Returns are Vital
Mortgage lenders will ask for your last two tax return statements and examine your adjusted gross income on each form, and then add the two numbers together. Then, they’ll divide the total by 24 to determine your average monthly income, which helps determine whether or not they will give you a loan.
Filling Out Paperwork
In order to prove your business cash flow, lenders will collect your tax form directly from the IRS, so you will need to complete the IRS Form 4506-T. This form allows the lender to ask for permission from the IRS to access your tax records.
Your Debt-to-Income Ratio
You are only allowed to borrow from a certain percentage of your income, which is your debt-to-income ratio. In order to qualify for the largest mortgage possible, keep your other debts, such as student loans, credit card debt and car payments, as low as possible. Eliminating your other debts would be the best possible option if possible.
Are you ready to buy a home? Contact our mortgage brokers for a free consultation so that we can provide you with the best mortgage rates today!