If you’re self-employed, you might have a harder time getting approved for a mortgage than someone with a steady paycheck. But don’t worry, there are still plenty of home financing options available for you. Here are some of the best ones to consider:
– FHA loans: These are loans backed by the Federal Housing Administration, which have more lenient requirements than conventional loans. You can qualify for an FHA loan with a credit score as low as 580 and a down payment as low as 3.5%. You’ll also need to show proof of income and assets, but you can use bank statements and tax returns instead of pay stubs and W-2s.
– VA loans: If you’re a veteran or an active-duty service member, you can take advantage of VA loans, which are guaranteed by the Department of Veterans Affairs. VA loans don’t require a down payment or mortgage insurance, and they have lower interest rates than most other loans. You’ll need to provide a certificate of eligibility and proof of income, but you can use alternative documentation such as profit and loss statements and business licenses.
– Bank statement loans: These are loans that use your bank statements instead of your tax returns to verify your income. This can be helpful if you have irregular or seasonal income, or if you write off a lot of expenses on your taxes. You’ll need to have a good credit score and a large down payment, typically 10% to 20%, to qualify for a bank statement loan.
– Portfolio loans: These are loans that are held by the lender instead of being sold to investors on the secondary market. This means that the lender can set their own criteria and offer more flexibility to borrowers who don’t fit the conventional mold. You might be able to get a portfolio loan with less documentation, lower credit scores, or higher debt-to-income ratios than other loans.
These are just some of the best home financing options for self-employed individuals. Depending on your situation, you might also qualify for other programs such as USDA loans, jumbo loans, or adjustable-rate mortgages. The key is to shop around and compare different lenders and loan products to find the best fit for your needs and goals.
