SELF-EMPLOYED

What is a Self-Employed Borrower? 

1. You own the company!  You own at least 25% or more of the company. Even if you are paid on a W2 – you are considered self-employed. 
2. 1099 – You are an independent contractor, freelancer, gig worker.  You pay your own expenses and pay your employment taxes.  You work for one or more employers.  You receive a 1099 at the end of the year.   

Lenders look for 24 months of self-employment.  However, if you were W2 and moved to 1099 or self-employed and stayed in the same industry you can qualify with only 12 months. For example, you were an insurance underwriter for five years, you move to owning your own insurance agency.  You are within the same industry.  

Three Ways to Qualify:  

Self-employed borrowers show income one of two ways. 

1. Tax Returns.  If you are a savvy business owner, you have written off your income to reduce your tax obligation.  These are terrible income documents when apply for a loan because you show little income.  
2. Business Bank Statements.  We can use your client deposits into your business bank statements.  Depending on the industry, we can use up to 50% of your business deposits as income.  

Now you have lots of income to use to qualify for your loan.  Business bank statement programs use 6, 12 or 24 months of bank statements.  Terms and conditions apply – talk to your loan officer.  

1. Personal Bank Statements – sole proprietors many times are using their personal checking account for business.  Yes we can use personal accounts showing client deposits.   Terms and conditions apply.  We pull out any transfers from your spouse or yourself for an example.  
   

The Prequalification Process in Arizona: 

1. Complete a mortgage loan application
2. Submit your income and asset documents 
3. The Mortgage Loan officer reviews and calculates how much house you qualify for based on the documents submitted.  
4. The Mortgage Loan Officer completes the Arizona Prequalification letter and submits the letter to your realtor.  
5. Once the realtor has the Prequalification letter, they will schedule time with you to see homes.  
6. Once you find the dream home and have a purchase contract, the lending process begins.  You and your Mortgage Loan Originator will become BFFs for the next 30 days! 

HOW MUCH DO I QUALIFY FOR USING BANK STATEMENTS?