What is a Self-Employed Borrower?
A self-employed borrower is someone that earns income through 1099, owns a business, or does gig work. This type of borrower may not have a steady income stream, a W-2 statement, or traditional income verification documents that are typically required for a traditional mortgage application.
Examples of Self Employment
- Business Owner
- Freelancer
- Painter who receives a 1099
- Uber or Lyft Driver
Who is eligible for a mortgage?
Self-employed individuals are eligible for most mortgages once they can prove self-employment for 2 years through filed tax returns.
How is income calculated for Self-Employed Borrowers?
Self-employment is usually calculated by taking the net (after expenses) income from the previous two tax seasons and adding back in eligible expenses such as mileage and depreciation.
What if I claim a loss each year?
Some self-employed borrowers claim a loss each year on their tax return. In this case, you may be eligible for a Bank Statement or 1099 Loan. These are Non-QM loans that base your income on your 1099 or deposited income on bank statements versus your tax return. These loans usually carry a higher interest rate and require 20% down.
With the right documentation and financial information, borrowers can obtain a self-employed mortgage loan and achieve their dream of homeownership. Contact The French Team today to learn more about getting a Self-Employed Mortgage Loan.
