Getting a Mortgage When You're Self-Employed

Being your own boss can have its advantages, except when it comes to purchasing a home. While it's not impossible for the self-employed to get a mortgage loan at the Lake of the Ozarks, it can be more difficult. It definitely requires advanced planning. Here are a few tips for the self-employed, to help you through the process:

1. Showing Proof of Income. 

Anyone applying for a mortgage has to show proof of income, showing accurate proof of income though, can be difficult for the self-employed. You also want to make sure your income is relatively consistent; while lenders can ignore seasonal spikes, they don't want to see a decrease in income from the previous year. This leads into the next point about choosing your deductions wisely, as these deductions will affect your income that is reported.  

2. Don't Take Too Many Deductions. 

If you know you're going to apply for a mortgage in the next two years, be careful what deductions you take. The more deductions you take, the lower your income looks on paper. Keep in mind that your Lake of the Ozarks mortgage lender is going to go by what the IRS forms say, not what you say you brought home. While taking deductions for your business has its benefits come tax time, it can pose a huge disadvantage when it comes to getting a home loan.  Random business expenses can come back to haunt you in the form of a lower taxable income, which results in a harder time qualifying for a loan.

3. Maintain a Good Credit Score. 

Whether you're self-employed or not, your credit score plays a big role in determining your loan approval. You don't want to jump through all the hoops of proving your income to find out your credit score isn't going to cut it. Make sure to maintain a good credit score in the months leading up to applying for a mortgage, and even after you've applied. Be sure to pay all your bills on time, use as little debt as possible, and don't open too many new credit accounts, especially in the 6-12 months before you apply for a mortgage.

Other tips for anyone looking to apply for a mortgage will also apply to those who are self-employed. While you may have to jump through a few extra hoops, the process of applying for a mortgage is the same as that of someone working for someone else. If you're self-employed and looking to obtain a home loan at the Lake of the Ozarks, give me a call at 573-746-7211. I will work with you every step of the way, providing the first class service you deserve!

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Michael Lasson

Sr. Residential Mortgage Lender

NMLS #: 493712

2265 Bagnell Dam Blvd, Suite B

PO Box 1449

Lake Ozark, MO 65049

Direct:  (573) 746-7211

Cell: (573) 216-7258

Fax:(573) 693-9141

Email:  mlasson@fsbfinancial.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.