How Self-Employed Buyers Can Qualify for a Mortgage

If you’re self-employed and thinking about buying a home, you might have heard it’s harder to qualify for a mortgage. The truth? While there are a few more steps involved, you absolutely can get approved, and Quazel Mortgage is here to guide you every step of the way.

Whether you're a freelancer, contractor, small business owner, or gig worker, this guide will show you how to prepare for a successful mortgage application and overcome the most common roadblocks.

What Makes Getting a Mortgage Tougher for Self-Employed Borrowers?

When you’re employed by someone else, your income is easy to verify. You get a W-2, and lenders can call your employer. But when you’re your own boss, lenders rely on your paperwork like tax returns, profit and loss statements, and business licenses to determine your income stability and ability to repay the loan.

On top of that, many self-employed borrowers take legal deductions that reduce their taxable income. That might be great during tax season, but it can also make your income appear lower on paper, which affects how much home you qualify for.

What Are Lenders Looking For?

Lenders want to see the following:

• A consistent income stream

• At least 1 to 2 years of self-employment history (preferably in the same field)

• A strong credit profile and manageable debt

• Documentation that proves your business is real and sustainable

What Documentation Will You Need?

Here’s what most lenders will ask for:

• 2 years of personal tax returns

• 2 years of business tax returns (including Schedule C, K-1, 1120S or 1065 depending on structure)

• Year-to-date profit and loss (P&L) statement

• Business license or articles of incorporation

• Client contracts, invoices, or 1099s

• Business insurance, if applicable

• Bank statements to show assets or down payment funds

If you’ve been self-employed for less than 2 years but have experience in the same field, some lenders (like us) may still be able to help. We’ll look at your previous W-2 income, education, and business momentum to assess your stability.

Tips to Strengthen Your Mortgage Application

1. Keep Business and Personal Finances Separate
Separate accounts and credit cards make your finances easier to evaluate and can reduce your personal debt-to-income (DTI) and credit utilization.

2. Monitor Your DTI Ratio
Your DTI shows how much of your income goes toward debt payments. Lower is better. Pay down credit cards and avoid taking on new debt before applying.

3. Build a Solid Credit Profile
Pay bills on time, keep your credit usage under 30%, and check your reports for errors. A stronger score helps with both approval and rates.

4. Save for a Larger Down Payment
A higher down payment can offset risk for lenders and make up for a lower reported income. It may also help you qualify for better terms or avoid private mortgage insurance (PMI).

5. Document Everything
The more organized you are, the easier your loan process will be. Showing consistent income and providing clear documentation gives lenders confidence.

6. Work With a Mortgage Broker Who Gets It
Some lenders shy away from self-employed borrowers. At Quazel Mortgage, we work with multiple lenders who understand your income may look different but still be solid. Whether you’re a consultant, salon owner, trucker, or creative, we can structure your loan the right way.

Loan Options for Self-Employed Borrowers

You may qualify for:

• Conventional Loans – Best for those with strong credit and good income documentation

• FHA Loans – Flexible with credit and down payment but require mortgage insurance

• VA Loans – No down payment required for eligible veterans and active-duty service members

• Bank Statement Loans (Non-QM) – Ideal for those who don’t show enough income on taxes but have strong bank deposits

• Co-borrower or Co-signer Options – Can help improve your loan profile if your income is borderline

What If You Don’t Qualify Right Now?

Not ready yet? We’ll give you a roadmap. Whether it’s reducing your debt, building savings, or setting up your finances more cleanly, we’ll show you what to do so you’re ready next time around.

Let’s Build Your Approval Plan

Self-employed doesn’t mean unqualified. You just need a lender who understands the process and can walk you through it with clarity and confidence.

At Quazel Mortgage, we’ve helped business owners, freelancers, and independent contractors buy homes across Utah, Idaho, and Florida. Let us help you next.

📞 Call/Text: 801-505-2567
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