I run my own solo law practice and work a lot with the state assigned counsel panel. My wife is a salaried employee at a firm. We currently own a townhouse but are considering upgrading in a few years as our family grows. My credit is good, but I’m concerned about the difficulties of getting approved for a mortgage now that I’m self-employed. Any advice?
If you’ve been self-employed for at least two years and report your income accurately, you shouldn’t have any problems. However, if you minimize your taxable income through deductions, it might be harder to qualify for a traditional loan. There are non-qualified mortgage options available in such cases.
@Linden
Exactly. Consider a bank statement loan if you’ve been writing off a lot of expenses. This way, you can balance the choice between paying more taxes or potentially facing higher interest rates.
The approval process will heavily depend on the income you declare on your tax returns and the duration your business has been operational. If your business has been running for over five years, you might only need to show one year of tax returns. Make sure not to write off too much income if you plan to use it for mortgage qualification. I recommend speaking with a loan officer to understand what income level you need to aim for to afford the house you want.
You’ll likely be fine if you have two years of tax returns showing consistent income, especially if line 31 of your Schedule C reflects a strong income.
You need to have been self-employed for at least two years to be considered for most traditional loans.
I faced significant challenges due to being self-employed. I had to restructure ownership of my business, making my wife the primary owner so I could draw a W-2 income.