Self-Employed? Here’s How You Can Improve Your Mortgage Approval Odds

Being self-employed is incredibly rewarding, but when it comes to getting a mortgage, it can present some unique challenges. The good news is, with a few strategic steps, you can improve your chances of getting approved!

Here’s how you can boost your mortgage approval odds as a self-employed individual:

1. Keep Clear Financial Records Lenders need to see a clear picture of your income. Make sure your business financial records are organized and up to date, with solid proof of consistent income. Typically, lenders look at at least two years of tax returns, so having detailed records is crucial.

2. Declare Your Income It can be tempting to reduce taxable income by claiming business expenses, but this can lower the amount you appear to earn. Declaring a higher income might mean paying more taxes, but it can also make you more eligible for a mortgage.

3. Build a Large Down Payment A larger down payment shows lenders you’re financially stable. Aim for at least 20%, as it reduces the lender’s risk and can offset the complexities of self-employment.

4. Reduce Personal Debt If you have personal loans, credit card debt, or car payments, reducing them can improve your debt-to-income ratio (DTI), making you a more attractive borrower in the eyes of lenders.

5. Strengthen Your Credit A high credit score is always helpful, but especially when you’re self-employed. Focus on paying down existing debts and avoiding new credit lines to boost your score.

Getting a mortgage when self-employed can be a little more work, but it’s definitely achievable with the right preparation. If you’re self-employed and looking for guidance, reach out—I’m here to help!