{"id":4247,"date":"2021-10-19T10:00:51","date_gmt":"2021-10-19T17:00:51","guid":{"rendered":"https:\/\/www.summerhillhomes.com\/blog\/?p=4247"},"modified":"2024-03-05T14:18:19","modified_gmt":"2024-03-05T22:18:19","slug":"self-employed-heres-how-to-buy-a-new-home","status":"publish","type":"post","link":"https:\/\/www.summerhillhomes.com\/blog\/2021\/10\/19\/self-employed-heres-how-to-buy-a-new-home\/","title":{"rendered":"Self Employed? Here\u2019s How to Buy a New Home"},"content":{"rendered":"\n<p>Working for yourself comes with plenty of benefits: you set\nyour own schedule, pick your own projects, and can work wherever you want. But\nhave you also given up on your chances of owning a home when you kissed\ncorporate life goodbye? Not quite! <\/p>\n\n\n\n<p>Getting approved for a mortgage isn\u2019t always a\nstraightforward process, especially if you\u2019re self-employed. The mortgage\nindustry favors conventional W2 employees over self-employed people because\nthey received stable income, which makes them more likely to repay loans.<\/p>\n\n\n\n<p>Just because you sign your own checks doesn\u2019t mean you can\u2019t\nbuy a home. It may require a bit more homework and effort on your end but you\ncan achieve your dream of homeownership. Here\u2019s how you can buy a home when\nyou\u2019re self-employed.<\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Document everything<\/h3>\n\n\n\n<p>Mortgage lenders will require self-employed borrowers to provide documentation to prove their income. These include (but may not be limited to):<\/p>\n\n\n\n<ul>\n<li>Two years of personal tax returns<\/li>\n\n\n\n<li>Two years of business tax returns, including\nschedules K-1, 1120, 1120S (some lenders will request this information directly\nfrom the IRS so you may need to sign a release form)<\/li>\n\n\n\n<li>Business license<\/li>\n\n\n\n<li>Year-to-date profit and loss statement<\/li>\n\n\n\n<li>Signed CPA letter stating you\u2019re still in\nbusiness<\/li>\n<\/ul>\n\n\n\n<p>Lenders want to verify that taking on this mortgage will not\ncause an undue financial burden.<\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Maintain a good credit score<\/h3>\n\n\n\n<p>High credit scores make the mortgage approval process easier, regardless of your type of employment. The higher your credit score, the more likely you\u2019ll qualify for a mortgage and favorable rates. Make it a habit to review your credit report and check for accurate information. Keep your credit utilization rate (the amount of credit you used versus the amount you have available) and your debt-to-income ratio low. <\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Keep separate business and personal accounts<\/h3>\n\n\n\n<p>Having separate bank accounts for your business and personal\nfinances is a smart move. If you\u2019re purchasing business expenses with your\npersonal credit cards, you\u2019ll increase your credit utilization and DTI ratios,\nwhich is detrimental to qualifying.<\/p>\n\n\n\n<p>Keeping your monies separate will also make it easier for\nlenders to verify the money used for your down payment. If you do use business\nfunds, lenders will want to make sure that won\u2019t negatively impact your\nbusiness. <\/p>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Reduce your tax deductions<\/h3>\n\n\n\n<p>It\u2019s typical for self-employed people to write off as many business expenses as possible to reduce their tax bills. However, this practice can work against you when it comes to qualifying for a mortgage. While these write-offs reduce your overall taxable income, lenders determine your creditworthiness based in part on your taxable income. If you keep reducing your income with write-offs, you may only qualify for a smaller mortgage than needed. Work with your tax preparer to determine the long-term impact of these write-offs and do your best to limit them for at least a two-year period before applying.<\/p>\n\n\n\n<p>Self-employed individuals face unique challenges when\napplying for a mortgage but you don\u2019t have to return to the office in order to\nbuy a new home. With careful documentation, you can improve your prospects of\nsecuring a loan.<\/p>\n\n\n\n<p>SummerHill Homes builds new home communities in desirable locations throughout the Bay Area. Start your search today by visiting <a href=\"https:\/\/www.summerhillhomes.com\/\">SummerHillHomes.com<\/a> to learn more about our communities, view virtual tours, and schedule a private tour and get ready to find your new home.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Working for yourself comes with plenty of benefits: you set your own schedule, pick your own projects, and can work wherever you want. But have you also given up on your chances of owning a home when you kissed corporate life goodbye? Not quite! Getting approved for a mortgage isn\u2019t always a straightforward process, especially [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":5309,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[453],"tags":[486,485,402,385,521],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Self Employed? Here\u2019s How to Buy a New Home - SummerHill Homes Blog<\/title>\n<meta name=\"description\" content=\"Are you self-employed and looking to buy a new home? Our guide has all the information you need to make the process a success.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.summerhillhomes.com\/blog\/2021\/10\/19\/self-employed-heres-how-to-buy-a-new-home\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Self Employed? Here\u2019s How to Buy a New Home - SummerHill Homes Blog\" \/>\n<meta property=\"og:description\" content=\"Are you self-employed and looking to buy a new home? 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