Self Employed? Get Approved!
As a self employed individual to get approved, means taking advantage of write-offs that allow your income to be in a lower tax bracket. However, this may also hurt your ability to qualify for a mortgage. Lenders generally require two year of Tax Returns; two years Notice of Assessment along with two years Financial Statements. For those self-employed, Tax Returns show a lower number for income, this will hinder qualifying based on income necessary to service the mortgage.
Think ahead. Two years prior to seeking a mortgage, work to get your personal taxable income to a larger number. A key piece if you are self employed to get approved.
Work with a certified accountant, lender will be more inclined to consider financials prepared and submitted by a professional that will consider you financial goals of getting a mortgage.
If you want a mortgage sooner rather than later and haven’t planned for this when filing your taxes, you can use Stated Income so long as you have been in the same profession for at least two years before becoming self-employed. More documents will be required, including bank statements that prove consistent income.
Lastly, you may have to consider a B lender. B lenders will be more flexible in considering your income. Of course, this does come at a cost of a higher interest rate. Once you have had time to increase your income, you may be able move to the A lender space.