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Self Employed Mortgage: How to Get a Mortgage as a Self-Employed Borrower

Traditional home loans are designed to help employees with a W-2 get a loan and buy their dream house, but what about those who don’t have tax returns? Is there such a thing as a self-employed mortgage?

While the term itself does not exist, there is a way for self-employed individuals to apply for a mortgage. The process may be harder, and the requirements can be more stringent, but it’s definitely doable!

If you need a self-employed mortgage, take a look at these things you can do make sure that you secure the loan you need to purchase a home. Without further ado, let’s dive right in…

Is It More Difficult to Apply for a Mortgage if You Are Self-Employed?

Unfortunately, the answer is yet. It may be harder to apply for a mortgage if you’re self-employed compared to a W-2 employee. This is because you need to submit more documentation that can prove your financial situation and abilities to repay the loan amount.

Moreover, not all lenders can cater to self-employed borrowers due to the more complicated underwriting requirements. This also means that you may need to look twice as hard to find a lender that has mortgage programs for self-employed individuals. But if you persist, they are there!

How to Qualify for a Mortgage for Self Employed Individuals

If you are self-employed, it’s a good idea to have an organized system to keep track of your different income sources. This will make it a lot easier when you want to apply for a home loan.

The most important things to keep in mind are what lenders want to see through your documentation. First, of course, is income stability. They will also want to know the nature of your self-employment. Are you a freelance copywriter? Video editor? Or a consultant for financial companies?

Another key factor to prove is the financial robustness of your business and its ability to generate enough income over time, which will ensure that you are able to repay your loan.

Requirements for Self Employed Mortgage

So, what are some things you need to have for a self-employed mortgage?

The most important one would be a form of employment verification. Note that you usually need to be self-employed for a minimum of two years.

Examples of documents you may be able to use:

Next, make sure that you have some income documentation to prove your income. This could be anything from tax returns, profit & loss statements of your business, and most commonly among the self-employed people, bank statements. The monthly bank statements can be personal or business, depending on the nature of your self-employment and what you can provide.

Although you have a consistent income now, your past income might also have a role in your application. So, it might be worth including them too!

Tips for Self Employed Mortgage

Here are some foolproof tips you can try to ensure that you qualify for a self employed mortgage.


Your DTI (debt-to-income) ratio measures how much of your monthly income is used for paying monthly debts. A low DTI ratio means that you have more money to spare because you’re not putting most of you income into paying debts.

A good percentage to aim for is 50% or below, and one way to minimize your DTI ratio is by reducing your debt.

Good credit score

Credit score is also an important factor to consider when applying for a mortgage. A higher score means that your credibility and ability to repay loans is better, which makes it more favorable for borrowers.

To improve your credit score, try to pay any debts you have on time, keep a low credit utilization rate, and avoid opening new accounts too much.

Separate your business expenses

Finally, if you need to spend money for business-related purposes like office supplies and computer upgrades, it’s best to keep them separate from your personal expenses. This will help you maintain a low credit utilization. You can do this by simply opening a separate account for your business.


When it comes down to it, there aren’t any major differences between employees and self-employed people who want to apply for a home loan. The documentation they have to submit may be different, but a self-employed mortgage is not always more expensive.

You must also understand that being self-employed means having multiple clients. And because it’s unlikely to lose all the clients at the same time, the job is more secure than most people might think.

Obviously, there may be more work to do as you need to submit tax forms, business licenses, and bank statements, but don’t worry! A self-employed mortgage is possible to get.

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