Self Employed Income, a good track record of self employment will help you secure a mortgage

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Self Employed Income


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Mortgage lenders want to see proof of your income; it is how they decide how much they can lend you. If you are self-employed - either part-time or full-time - this can be difficult. You don't receive a W-2 at the end of the year, so you have to find other ways to demonstrate your annual earnings.

When it comes to proof of self-employed income, more is always better. Typically, the mortgage lender will ask for your most recent profit and loss statement - a list of how much money you made for the year minus the expenses you paid. But, this is the first step. The lender also will want to see your tax returns for the last two years. The tax returns prove how much money you made. A recent bank statement can show both the funds in your account and the size and frequency of deposits.

For the self-employed, the tough part of getting a mortgage is proving the future. How does the bank know your business will continue to do well?

One way to show the mortgage lender that you have a strong business is your operating history. Having a good track record of self-employment will help you secure a mortgage. If you do not have a long operating history, you can show the bankers any contracts that you have with clients. The contracts show relationships that will generate future income.

Being self-employed makes getting a mortgage a little tricky. But, if you have all your documents ready from the start, the process becomes much easier.