Applying for a mortgage
in the US lending system is pretty simple, unless of course you’re self-employed. While traditional employees have tax returns and W2s to show off to banks and other lenders to prove their ability to pay off a large loan, self-employed individuals don’t have that same luxury. What documentation will you need to get a mortgage?
Previous Tax Returns
First and foremost, gather up your previous tax returns for the business (or individual if sole proprietor). Ideally, you’ll want to show at least your previous two years of tax returns to the lender to show that your income was not a flash in the pan. Provide as many years as you can because it establishes a financial track record, and may even show off year-over-year increases and growth.
Signed Statement from Accountant
There are a lot of pitfalls that self-employed individuals will face in getting a mortgage. One of those is the amount of deductions you write off as debt for the business to lower your taxable income. Lenders are always approach such information with caution, so obtain a signed statement from your certified accountant to vouch for the strength of your income and business operations.
Establish a Track Record
If you can show the lender your profit-and-loss statements and balance sheets, it can help establish a positive track record for your business and make you a more attractive borrower even though you’re self-employed.
If you’re buying the home with a spouse or partner, make sure to include their W2. It establishes further income for consideration in the lending process, and increases the likelihood you’ll secure the mortgage you need for that new home.