Self Employed? Tips To Help Prove Your Income When Applying For A Mortgage
Getting a mortgage for some individuals may be as simple as visiting their bank and going through the application process. However, getting a mortgage can be much more challenging if you are self employed. Being a freelancer means that you don't receive a consistent paycheck every two weeks, and your income can vary greatly from month-to-month. A lender may not want to take a risk on you unless you are able to prove that you would be capable of repaying the loan. Here are a few ways you can prove your income.
Bring Bank Statements
The best way that you can show your income history in recent months is to bring bank statements for the account where your freelance income is deposited. Each statement will show your income for whole month, and it can be used to prove how much you are making on a monthly basis. Hopefully, these numbers will be able to prove that you are consistently making money, even though it may not be the exact same amount for each check you receive.
Your goal will be to prove continuous employment. If you have a notable gap in employment where money was not coming into the account, it will help to prove why that happened. For example, you may have recently had a baby and decided to take time off to care for your child.
Show Tax Returns
You don't need to bring in bank statements for every single month. An easy way to show how much you have made in previous years is to bring in your old tax returns. This can help demonstrate how much you have made in previous years, and show that your freelance is growing and that you are making more money every year.
Lenders like to see longevity in self employment, which helps show that your employment is not a short term gig that will be replaced with something else after you close on the home.
Have a Large Down Payment
Another way to prove income is to show how much you are capable of saving. You can do this by providing a large down payment on the home that you want to purchase. Having 20% of the cash on hand is not only a great way to show off your savings account, but can provide benefits that lower your monthly home cost by getting a better interest rate and avoiding private mortgage insurance.
Contact a provider, like Attorneys Funding Group Inc, for more help.