Mortgage for Self-Employed Borrowers Without Tax Returns
Mortgage loans provide financing for entrepreneurs who want to buy a home or to refinance.
Prior to funding, a borrower’s income and assets are verified to ensure affordability.
Knowing where to apply for a mortgage for self-employed borrowers could determine whether a loan approval or a denial is issued.
Affordable Debt Ratio
Conventional mortgage guidelines limit 28% of a borrower’s gross monthly income for an affordable monthly housing payment. A borrower’s total monthly debt cannot exceed 36% of their gross monthly income.
VA and FHA total debt-to-income ratios are set at 41% and 43%, respectively.
A variety of compensating factors, such as a low loan-to-value, a down payment of 25% or more, excess financial reserves or a superb credit score may be considered to exceed the standard debt ratio guidelines.
Traditional Income Documents
Mortgage industry guidelines have specific income requirements for conventional loans and for government-backed loans.
Generally, a mortgage lender will request copies of several recent pay stubs, W-2’s and tax returns for the past two years.
Alternative loan programs or a mortgage for self-employed borrowers without tax returns or traditional income documents may be used to buy a home in Arizona, California or Colorado.
Non-Qualified Mortgage Loans
Non-QM loans offer flexible guidelines for self-employed borrowers.
Used for purchase and refinance transactions, Non-QM loans do not conform to Fannie Mae or Freddie Mac requirements.
Non-QM loans often facilitate financing for a home buyer in situations where traditional lenders won’t fund a mortgage for self-employed borrowers.
Debt Service Coverage Ratio Loans
DSCR loans are ideal for real estate investors.
Designed to provide financing for income-producing properties, a DCSR mortgage for self-employed borrowers without tax returns is a game-changer.
To meet the income requirements for a DSCR loan, a property must have sufficient cash flow to cover the subject property’s debt service versus using an investor’s personal income.
Bank Statement Mortgage Loans
Bank statement mortgage loans are a popular option among self-employed borrowers.
A business owner might generate enough revenue to pay for a home mortgage loan.
However, after writing off various operating expenses, the owner’s bottom line may be unable to support a monthly mortgage payment.
A bank statement mortgage loan enables the borrower to use a portion of the annual deposits toward qualifying income.
Apply for a Mortgage for Self-Employed Borrowers
Without tax returns or W-2’s, a self-employed borrower might forgo applying for a mortgage loan.
Although, there’s good news!
Obtaining a home loan via a variety of specialty lending resources could help a business owner secure an affordable mortgage.
Mindful Money offers attractive financing for borrowers in Arizona, California and Colorado.
Inquire now about a mortgage for self-employed borrowers.
Apply online for faster support.
Schedule a call with Samantha Cooley for more details.