NEWS OLD

Rules for Self-Employed Mortgage Borrowers

For the 14 million or so self-employed borrowers that live in the U.S., it’s going to get easier to become approved for a mortgage. 

Being self-employed and getting approved for a mortgage is everything but easy. Recently, Fannie Mae issued new loan guidelines related to self-employment income that makes it easier for the self-employed to get approved for mortgages. Some of the highlights include a decrease from two years of federal income tax returns to one and also borrowers with self-employment second jobs no longer have to show proof of income if they are qualified based on the income from their salary-based job. Learn how you may be affected by these new and improved self-employed mortgage borrowers rules.

Self-Employed? Get Approved for a Mortgage

When you are buying a brand new home or doing a refinance loan, you need to follow a specific set of steps to get approved.

  1. You apply for the loan, which you can do in-person or by telephone. You’ll need to disclose your annual income, savings, debts, and your employment history and a record of your past residences.
  2. Once completed, your application is handed over to a bank employee titled an “underwriter.” Your underwriter will review the information provided, make requests for any clarifications, and ask for documentation to prove the information you’ve provided.

It’s important to know that the process varies from applicant to applicant and loan to loan. The documentation required by an underwriter is to ensure you meet the minimum qualifications set by the bank.

Lenders have recently reduced the amount of paperwork for many self-employed persons, and those with “second jobs,” the paperwork requirement is waived altogether.

Mortgages may seem like stressful contracts to obtain, but with the right preparation, they don’t have to be! Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.