Mortgage Qualifying for a Self-Employed Professional

Getting a mortgage can be challenging for anyone, but self-employed professionals often face extra challenges. Unlike traditional employees who have consistent salaries and guaranteed hours, self-employed individuals typically experience fluctuating incomes. This unpredictability can be a concern to lenders. However, with the right strategies and team behind you, securing a mortgage is within reach.

Understanding the Unique Challenges

Self-employed individuals face unique challenges when trying to get a mortgage. Lenders usually require clear proof of income. Many self-employed people claim a lower income and higher write-offs to minimize taxes which is great at tax time but can present a challenge when qualifying for a mortgage.

For self-employed borrowers, lenders usually require multiple years of tax returns, profit and loss statements, and other financial documents both personally and from their company. The lenders require additional documentation to confirm if there is a consistent history of reliable income.

The, oftentimes, unpredictable income, and low company profit are the greatest challenges when qualifying for a mortgage as a self-employed individual.

Preparing Your Financial Documents

One way to simplify the process is to have financial documents ready to go before submitting an application. Lenders will typically request:

• Tax Returns: Most lenders will want at least two years’ worth of personal tax returns. This allows them to assess your income stability and trends over that period. For instance, if your tax returns show a steady increase from $50,000 in the first year to $70,000 in the second, it can positively influence the lender's assessment.

  
  

• Profit and Loss Statements: A detailed profit and loss statement offers a clear snapshot of your business earnings and expenses over a specific period. This information is invaluable for lenders to gauge your financial performance.

  
  

• Bank Statements: Providing several months’ worth of bank statements (both personal and business) can illustrate cash flow. It demonstrates your ability to manage expenses while maintaining positive balances.

  
  

Gathering these documents ahead of time helps streamline the application process and present a clear financial picture to lenders and allows Gert Martens Mortgage Team to advise you in the best way possible. If you are approaching year end and want to make sure you'll qualify for a mortgage, reach out to our team before submitting year end, this ensures that you can claim enough income to qualify and set yourself up for mortgage success!

Choosing the Right Lender

Not all lenders are the same when it comes to working with self-employed borrowers. Some lenders specialize in loans for self-employed individuals and may offer more flexible requirements. Once you have your documents, contact Gert Martens Mortgage Team so that we can compare different lenders and find one that understands your specific needs.

We have lenders who look at self employed income in a traditional way, and others who have programs designed specifically for self employed people with more unique circumstance.

For instance, some lenders might accept bank statements as proof of income rather than relying solely on tax returns. This can be particularly helpful for those with inconsistent income, as it provides a more accurate representation of their financial stability. Additionally, some lenders offer "stated income" loans, where you can state your income without extensive documentation.

The great thing is our team will run all of the different scenarios for you, ensuring that you get a mortgage that makes sense for you!

Working with an Experienced Mortgage Broker

The mortgage process can be overwhelming, especially for self-employed individuals. Working with Gert Martens Mortgage Team can help simplify that process. We find suitable lenders, gather required documents, and walk you through the whole process. We have years of experience getting self-employed clients approved for a mortgage!

Navigating the mortgage landscape as a self-employed professional doesn't have to be hard...contact Grande Prairie Mortgage Broker Gert Martens and her team and get the process started today!