Unlike traditional home loans, self-employed home loans require additional documentation to prove your income and financial stability.
Tax returns
One of the most important documents you’ll need to provide when applying for a self-employed home loan is your tax returns. You’ll need to provide the last two years of personal and business tax returns, including all schedules and attachments. Your tax returns will help lenders determine your income, expenses, and overall financial stability. Be sure to include all forms of income, including 1099s, W-2s, and any other sources of income.
Profit and loss statements
In addition to tax returns, lenders will want to see your profit and loss statements (P&Ls) for the past two years. Your P&Ls should detail your business’s income and expenses, and should match the figures on your tax returns. If your P&Ls show significant changes in revenue or expenses, be prepared to provide an explanation.
Bank statements
Lenders will also want to see your personal and business bank statements for the past few months. This will help them verify your income, as well as your expenses and other financial activity. Be prepared to explain any large deposits or withdrawals, as these could impact your eligibility for a self-employed home loan.
Business license and registration
If you’re self-employed, you’ll need to provide proof of your business license and registration. This will help lenders verify that your business is legitimate and registered with the appropriate state or local authorities.
Contracts and invoices
If you have contracts or invoices with clients, be prepared to provide these as well. This can help demonstrate the stability of your business and provide additional evidence of your income.
Credit score and report
Finally, you’ll need to provide your credit score and report. Your credit score is an important factor in determining your eligibility for a self-employed home loan, and lenders will want to see that you have a good credit history. Be sure to review your credit report before applying for a loan, and dispute any errors or inaccuracies.
