For self-employed borrowers, it can seem particularly difficult to get a mortgage given the detail of documentation required.  However, since August 2015, Fannie Mae has been working with a more relaxed set of guidelines for self-employed.

The looser guidelines focus on three key areas…

  1. Self-employed borrowers with no history of taking a paycheck
  2. Self-employed borrowers who don’t have two years of Federal Returns to support their business income
  3. Salaried borrowers with a second, self-employment job for which income is not required to qualify

For Self-employed borrowers without two years tax returns, guidelines have been loosened to allow one year of returns, provided that those returns show 12 months self-employment income.

Plan in advance for your mortgage…

To qualify for a mortgage in the next couple of years, self-employed borrowers should speak with an accountant and a mortgage professional now. It’s important to know how much income will be necessary based on the price range of the home you’re trying to purchase or refinance.

Unlike salaried workers, self-employed business owners can alter how much they make on paper by writing off more or less in business expenses. A two-year strategy pays off when you eventually apply for a loan.

Generally, self-employment will not hinder your approval as long as you can document the following.

  • Adequate income
  • Proof of self-employment for at least two years

Documents you should plan to show…

  • Two years of personal tax returns
  • Two years of business tax returns including schedules K-1, 1120, 1120S
  • Business license
  • Year-to-date profit and loss statement
  • Balance sheet
  • Signed CPA letter stating you are still in business

Tax professionals are very accustomed to providing necessary documentation for a mortgage. Your CPA may even be able to email you all your required documentation the same day.


Check your rate for a self-employed home loan.

The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Supreme Lending, and do not necessarily represent the views and opinions of Supreme Lending. In no way do I commit Supreme Lending to any position on any matter or issue without the express prior written consent of Supreme Lending’s Human Resources Department.