Lenders are always concerned about applicants having the ability to repay the mortgage.
With an employed individual the flow of income is steady and dependable and health benefits may include disability insurance and life insurance. What you need to show a lender is pretty straightforward, maybe a few pay stubs possibly a tax return or a letter from your employer.
With a self employed individual especially a small business owner the flow of income is heavily dependent on the individual and your income is far more impacted by a slow down in business whether from external or internal forces.
So what do you need to do to prove to your lender? Here are some things you may need:
- steady flow of income – maybe two years worth.
- down payment
- list of debts and assets
Remember that the lender will look at your net income of the business not the revenue generated so they will likely want to see your personal tax returns or business tax returns.
As always it is very important to manage your debt-income ratios. This can be a challenge if you need a loan for your business or access to your personal line of credit to keep your business going
And of course your credit score is very important. A lot can be said for running a business and maintaining your credit score. It is a good habit to check your credit score regularly to spot issues or errors on your report before you need to rely on it for a mortgage.
This is where an experience Mortgage Broker can be in your corner fighting for you. Check out my website page under Communities – Service Providers for a qualified Mortgage Broker.