Tips for Getting a Mortgage When Self-Employed
For those of you who are self-employed and looking to buy a home, today’s article is directed towards you! Keep reading for more.
There is a myth out there that those who are self-employed do not qualify for an FHA loan. To reiterate, this is a myth. If your business has already taken off and has provided you income for two years, then it will be treated like any other source of income. The only time someone who is self-employed may not qualify, is if that is the only source of income and if it is still in the beginning stages of making a profit.
It’s also imperative that you separate your business and personal incomes. In the event of an audit, you’ll be required to distinguish between your personal and business finances, so to keep them separate from the beginning will lessen your stress in the event of an audit. To elaborate on finances, keep your mind open when it comes to your lending options. If a mortgage is not feasible, you can consider borrowing from your 401(k) or IRA. While this is not ideal, it is an alternative if you are desperate. You should also be prepared to plan carefully around your taxes seeing as you have to pay employer and employee shares of Social Security/Medicaid taxes.
The last piece of advice we have to offer is to have a backup plan and involve professionals/ They can guide you through some of the confusing financial technicalities. Good luck and happy hunting!