Over the past few years, it’s gotten more difficult for almost all home buyers to get mortgages, but self-employed buyers have even more hurdles to overcome. Here are some tips you can follow if you’re self-employed and trying to obtain a Florida mortgage, or refinance a home:

  • Income: The key issue is the need to prove your income to any mortgage lenders when you’re applying for the loan. Typically, lenders will want to see at least two years of income, as shown on your tax return’s Schedule C (Sole Proprietorships), 1120’s (S-Corporations), or 1065’s (Partnerships) Note: Lenders generally prefer that borrowers employ an accountant rather than prepare their own returns. If you don’t have two years of income to show with your business, some mortgage lenders will still consider your application if you have a track record of regular work, if you’ve left a job to work as a contractor in the same industry, or you can prove you’ve got work lined up.
  • True Income: Self-employed people often rely on tax deductions related to their businesses to reduce their taxable income. But when your mortgage lender looks at your returns, they’ll typically see the bottom line, after your deductions, which may be much lower than your true income. Some lenders will allow certain deductions to be added back into income, such as depreciation on a large, non-recurring asset like a car.
  • Other Expenses: While depreciation might be added back in, other deductions can work against you. Meals and entertainment, for example, are only 50% deductible, but the lender will go back and deduct 100% of the cost from your income. If you can, plan ahead (with the help of your accountant) and write off fewer expenses in the two years leading up to your home purchase.

Get the Facts

In addition to these techniques, you can look at smaller loans, getting a co-signer, or larger down payments. The important thing to remember is that a mortgage loan expert can review your available options and make sure you get credit for all of your income. At Embrace Home Loans, we can work with self-employed buyers to help you get the Florida mortgage you want. Find out more at by browsing our website, or call 407-733-6425.