Self Employed Qualify For Mortgage

Step 1: Income

In most respects, this is the most critical aspect of your financial profile. The lender will be looking to verify the stability of your income, in addition to how much you earn.

We need to review, but maybe won’t use everything, send in the following documentation:

  • Complete personal income tax returns for the two most recent tax years, complete with all schedules Your IRS 2019 2018 with all schedules and page two signed
  • If your business operates as a corporation or a partnership, we may also require complete business income tax returns for the past two years. Therefore, send me the LLC, S Corp or any and all other Federal Returns for the past two years filings
  • This is not something you may have on paper but get started preparing a year to date profit and loss statement.
  • Later we may also ask for proof that you have an operating business and how you bring in clients. The URL of your business website might suffice or a copy of a business license, or a written statement from a CPA confirming that you have been in business for the past two years.

With this information we might likely average your business income for the past two years (total net income divided by 24 months), but we might only need the most recent year. I won’t send in the whole novel, I wait to verify what Underwriting must have…

Income evaluation is the major criteria that makes qualifying for a mortgage as a self-employed borrower more difficult than it is for employed borrowers.

Step 2: Credit


 A credit score over 720 will be a big advantage, but there are methods to raise the score such as paying down high balance cards to less than sixty percent of the line. DO NOT close any accounts, this will hurt the score.


Step 3: Assets and down payment

The amount of cash for down payment is also a more important factor with the self-employed. While salaried borrowers might be able get by with a down payment of three or five percent, lenders typically look for larger down payments from the self-employed.

Step 4: Debt-to-income ratio (DTI)

This is a mortgage industry term that describes the formula used to determine that your income is sufficient for the loan you’re applying for.

There are actually two ratios:

Housing ratio

That’s your new monthly house payment, divided by your stable monthly income.

If your stable monthly income is $6,000, in the new house payment will be $1,500, your housing DTI will be 25 percent ($1,500 divided by $6,000).

Your new monthly housing payment includes the new mortgage payment, plus monthly allocations for property taxes, homeowner’s insurance, mortgage insurance, flood or earthquake insurance, or homeowner’s association dues. It does not include utility payments.

Total debt DTI

If your income on the taxes is net zero or negative we may be able to use the deposits in ONE bank account over the past twelve or twenty four months.

Let’s talk about the options to get you the best home loan with the lowest monthly payment!



(949) 784-9699

NMLS 324982


 This is not a commitment to lend. Equal Credit Opportunity



Monarch Butterfly Mortgage

I have an acre of a variety of milkweed planted to help monarch butterflies.
They are endangered and need our help. If you apply for a mortgage with
me I will send you seeds, a plant if your Agricultural Department allows for
your area, some eggs and instructions. I have several friends who have 
monarch sanctuaries in western states and I donate and support them in our
love for these creatures. Did you know a small percentage of them are super
heroes that fly millions of miles?

Here are two ten second videos of new born monarch butterflies ready to be
freed from my screen porch. Enjoy!