Mortgage Options for Self-Employed and Non-Traditional Applicants

October 2, 2023

Mortgage Options for Self-Employed and Non-Traditional Applicants

You might be wondering if you can get a mortgage loan if you’re self-employed. The good news is yes, you can. Like salaried individuals, you need to prove income stability and creditworthiness. 

Furthermore, there are several mortgage options available for self-employed people, business owners, freelancers, and other non-traditional workers. With the right planning and preparation, you can secure a home loan.

Self-Employed Defined

According to financial institutions, you are deemed self-employed if you own at least 25% of a business. You can be a partner or sole owner. Self-employment also includes gig workers, remote workers, freelancers, and contractors.

What You Need to Prove

Since self-employed individuals don’t have W-2s to prove their income, they will need to provide documentation of a stable income for two years. This is usually done by submitting their tax returns for two years. You may also need additional documentation such as a bank statement or 1099s. This is why it’s a good idea to have all your paperwork ready when you go to apply for a mortgage loan.

Mortgage Options for Self-Employed Individuals

Traditional Mortgage Loan- A traditional mortgage isn’t guaranteed by the government. This loan type is a huge risk since the government is not going to pay it back if the borrower can’t.

FHA Loan – FHA loans are guaranteed and insured through the Federal Housing Administration (FHA). The loan is offered by a mortgage lender or bank and if the borrower can’t pay the loan back, FHA steps in to help.

USDA Loan – If you’re a self-employed freelancer dreaming of working out of your country home, a USDA loan might be the one for you. USDA loans offer mortgages with no down payment on houses in specific areas. The two types of USDA loans are guaranteed (offered by private lenders) and direct (offered by USDA).

VA Loan – A VA (Veterans Affairs) loan is offered to individuals currently serving in the armed forces or veterans. If you’re the spouse of a soldier who died while on active duty, you qualify for a VA loan. VA loans require no down payment to buy a home.

Bank Statement Loan – A bank statement loan is a viable option for the self-employed because you don’t have to submit proof of income or tax returns. Instead, your bank statements for one or two years are used to assess the money deposited and charged from your bank account.

Denver’s Top Mortgage Company

If you’re self-employed and looking at mortgage loans, your best bet is to do your research and look for the ones with the best terms to fit your needs. You can also get help from the best mortgage company in Denver to guide you in the right direction. If you’re interested in buying a home, call or email us so we can talk about the different mortgage options available for you.