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Can I use projected future income to qualify for a self-employed home loan?



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If you’re a self-employed borrower with a promising future income, you may wonder if you can use projected future income to qualify for a self-employed home loan. In this article, we’ll explore the possibilities and considerations of using projected future income to secure the financing you need.

  1. Building a Compelling Case:

Using projected future income requires building a compelling case that convinces lenders of your ability to generate consistent income in the future. Consider the following factors:

a. Business History and Growth: Lenders will evaluate the history and growth trajectory of your business. A solid track record of profitability and a demonstrated ability to adapt to changing market conditions can boost your case.

b. Market Research and Analysis: Conduct thorough market research and analysis to support your projections. Demonstrate a clear understanding of your target market, future trends, and competitive advantages that contribute to your projected income growth.

c. Long-Term Contracts or Agreements: If you have long-term contracts or agreements in place that ensure a steady income stream, provide them as evidence of your projected future income. This can increase lenders’ confidence in your ability to meet your financial obligations.

  1. Presenting a Strong Business Plan:

To convince lenders of your projected future income, a well-crafted business plan is crucial. Your business plan should include:

a. Financial Projections: Include detailed financial projections that outline your expected income and expenses over the next few years. Ensure that your projections are realistic and supported by market research.

b. Contingency Plans: Address potential risks and contingencies in your business plan. Show that you have considered potential challenges and have strategies in place to overcome them, demonstrating your preparedness and ability to navigate uncertainties.

c. Marketing and Growth Strategies: Outline your marketing and growth strategies that will contribute to increased revenue and income. This shows lenders that you have a clear plan to generate income and achieve sustainable growth.

  1. Working with Specialized Lenders:

When using projected future income, it’s important to work with specialized lenders who understand the unique circumstances of self-employment. These lenders are experienced in evaluating self-employed borrowers and can provide guidance on the loan options available to you.

  1. Alternative Financing Options:

In some cases, alternative financing options may be more suitable for self-employed borrowers relying on projected future income. These options, such as private lenders or non-traditional loan programs, may have more flexible requirements and be more open to considering projected income.

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