I’m self-employed and want to buy my first house. What should I do?

Q: T.G. in Morrow: I’m self-employed and want to buy my first house. But I’ve heard it can be hard to get a mortgage if I don’t have an actual employer. What should I do?

A: Yes, lenders like to see documentation of steady income. And this can be difficult if you’re a contractor, freelancer, or self-employed. However, this doesn’t mean you’re out of luck!

Make sure you have solid earnings documentation. This means having proof of a couple years’ worth of stable employment and income, and the overall trend should show an increase in income. Being able to show you have cash reserves is a good idea as well. A higher down payment also offers lenders more reassurance.

Also, be sure your credit score is in good shape – a score of 740 or higher usually unlocks access to the best available interest rates. And consider working with a smaller lender that keeps mortgages on their own books (such as a credit union); they’ll have more flexibility in who they approve.  

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