Buying a Home as a Self Employed Homebuyer

Buying a home as a self employed homebuyer can be a great way to get into a home you’ll love. However, there are some things you should keep in mind before you go out looking.

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self employed homebuyer

Bank Statement Mortgages for Self Employed Homebuyers

Getting a bank statement mortgage is a great option for self employed homebuyers. It allows them to document their income without relying on pay stubs or tax returns. The application process is simple and can be completed in just a few days.

Bank statement loans are also a viable option for people who have unstable or inconsistent income. For these types of borrowers, it is important to shop around to find a lender that can approve the loan. Be ready to answer any questions the lender may have and respond promptly.

Most lenders require at least a 12-month history of bank statements. However, some borrowers only need two to three months. Depending on the type of loan, a down payment of up to twenty percent may be required. Those with a lower credit score might be required to put down a larger down payment.

Because of the lack of traditional financial documents, many self-employed borrowers have difficulty qualifying for a Mortgage. They are often faced with substantial tax write-offs, which make it difficult to prove their income.

Tax Breaks for the Self-Employed

Those who are self-employed have a lot of tax breaks available to them. For example, they can write off half of their self-employment tax. They can also claim the standard deduction. Depending on their tax bracket and AGI, they may be able to claim the Saver’s Credit, which is worth 20% of their contributions.

If you are a homebuyer, you can qualify for tax breaks that include the Residential Renewable Energy Credit. The credit will help you get back 30% of the cost of upgrading your home to be more energy-efficient. It will also help reduce your tax bill by a dollar for dollar basis.

For the self-employed, you can also claim a home office deduction. The IRS will consider your office a home if you meet certain requirements. The expenses you can claim are property taxes, real estate taxes, utilities, insurance premiums, and business travel. There are two ways to claim your home office, and you can claim up to $10,000 in deductions if you are married filing separately.

Working With an Independent Mortgage Broker

Whether you are a first-time homebuyer or an experienced real estate investor, working with an independent mortgage broker can be an invaluable resource. Not only can a mortgage broker help you find the right loan program, but he or she can also help you determine what type of mortgage is best for you. These brokers have access to a variety of financial institutions and loan programs. They can offer you a wide selection of options and competitive rates.

An independent mortgage broker may have a different set of requirements than a traditional mortgage lender. For example, self-employed individuals must prove that they have been in business for at least two years, have a steady income, and can meet the monthly payment obligations. Lenders also look for evidence of a significant decline in income, as this can indicate a weakening business.

Moreira Team is very experienced with all types of mortgages and unique situations so get in touch now and we can help you.