If you have good credit and enough money to pay a significant down payment, you
can use so-called low-document and no-document loans, two of the most popular
options for self employed borrowers.
Low-doc loans require a larger than normal down payment, but in exchange; you
don t have to verify your income by showing tax returns and other financial
paperwork. Usually a credit check and one or two bank statements is sufficient
documentation. The process is streamlined, simple, and advantageous for those
whose income may look smaller on paper than it actually is.
The closely related no doc loans require no documentation of income at all.
These are one of the easiest loans of all to process, so if you qualify for one
of these, your mortgage application will not take very long at all.
The downside is that both of these loans require larger down payments usually 20
percent or more and they carry slightly higher interest rates. But for those who
don t mind paying a little extra for the convenience of qualifying, both
mortgages represent excellent choices.
Many do-it-yourself home sellers will also offer to arrange their own owner
financing for those who are self-employed. They know that this gives them an
edge in a competitive market, and they often understand that self-employed
people constitute one of the highest income brackets, and are usually dependable
borrowers. Even if you aren t dealing with for sale by owners directly, you can
request your Realtor to show you houses that offer seller financing, in order to
discover more mortgage options as you house hunt.
In addition to owner financed purchases, self-employed people can look for funds
from professional private lenders. Many private investors sell mortgages for a
living, and they offer competitive and unique kinds of loans, in order to gain
their share of a niche market that is not normally served by the traditional
banking community. If you are self-employed, chances are you can borrow money to
buy a house by going to a private lender in your area.
You will probably pay a higher interest rate, but that is going to be the case
with almost any special loan made to assist those who are their own bosses. Once
you own a home and have equity in your property, you will probably qualify to
refinance into a conventional type of mortgage, so that is a good plan for the
future for those whose choices may be limited in the beginning because of