Benevolence Financial Group (BFG) is now Open Home Loan. Start home loan rate tracking and let Open automatically shop around for you – over your loan duration. When your ideal rate is reached, we’ll ask your bank to match it. Choose to stay or switch in minutes. No effect on credit score. Start for free.

How is the eligibility for a self-employed home loan determined?



2 Mins


Share this post

What factors are considered for self-employed home loan eligibility?

When determining eligibility for a self-employed home loan, lenders consider several factors. Here are some of the key factors:

  1. Income: Lenders will want to see that you have a steady stream of income that is sufficient to cover the mortgage payments. As a self-employed individual, you’ll need to provide documentation of your income, including two years of tax returns, profit and loss statements, and other financial documents.
  2. Credit score: Your credit score is an important factor in determining your eligibility for a self-employed home loan. Generally, lenders prefer to see a credit score of at least 620 for self-employed home loans.
  3. Debt-to-income ratio: Your debt-to-income (DTI) ratio is another important factor in determining eligibility for a self-employed home loan. Your DTI ratio is calculated by dividing your monthly debt payments by your monthly gross income. Generally, lenders prefer to see a DTI ratio of 43% or less for self-employed home loans.
  4. Down payment: Lenders typically require a larger down payment for self-employed home loans than for traditional home loans. Generally, you’ll need to make a down payment of at least 10-20% of the home’s purchase price.
  5. Employment history: While self-employed individuals don’t have a traditional employment history, lenders will still want to see that you have a stable income stream. This may include evidence of long-term client relationships, contracts with clients, or other documentation of your business stability.

How can you improve your eligibility for a self-employed home loan?

If you’re self-employed and looking to improve your eligibility for a self-employed home loan, there are several steps you can take. Here are a few:

  1. Improve your credit score: If your credit score is below 620, work on improving it. This may include paying down debt, making on-time payments, and disputing any errors on your credit report.
  2. Reduce your debt-to-income ratio: If your DTI ratio is above 43%, work on paying down debt or increasing your income to bring it down.
  3. Save for a larger down payment: Saving for a larger down payment can help you qualify for a self-employed home loan and may also result in a lower interest rate.
  4. Keep good records: Keep meticulous records of your business income and expenses, and make sure your tax returns accurately reflect your income. This can help you demonstrate your financial stability to lenders.
  5. Work with a lender who specializes in self-employed home loans: Working with a lender who has experience working with self-employed individuals can be helpful. They will be familiar with the documentation requirements and can guide you through the process.

Send Us a question

Have something in mind?