If you are a self-employed home buyer, you might be wondering how the nature of your income could potentially impact your mortgage application.
The truth is that being self-employed is not a barrier to getting a mortgage, but the process may be more challenging compared to someone that earns a traditional salary. Lenders will likely need more documentation to fully understand your unique financial story, which will allow them to offer the best financing solution for your situation.
In this light, it helps to have certain documents on hand if you are self-employed looking to obtain a mortgage. Below are five things to prepare when you are ready to make that jump into homeownership as a self-employed home buyer.
of your income sources
Having a stable source of income shows that you can make the payments required to service a mortgage, so make sure your income sources are well-documented and can be easily verified by lenders. This includes contracts and agreements, as well as financial statements.
Lenders look through bank statements to verify that your income flow can service a mortgage and to make sure that you have the necessary funds to pay for the down payment and closing costs. From your bank statement, they can also see if you have any existing loan balances that need to be paid off.
showing the source of your down payment
When applying for a mortgage, lenders will typically ask for documents that verify the source of your down payment. They will require this information whether your down payment comes from the sale of your current home, your savings or is a gift from family members. This is to ensure that borrowed money is not being used for the down payment.
or professional licenses
If you are a business owner, lenders might ask that you provide them with your business license and permits. You should also be ready to provide your professional license if you work in a regulated field.
Some documents that lenders might ask for include notices of assessment, T1 general tax forms, T4 or TA4 forms and forms related to your GST/HST obligations.
One Link Mortgage Broker can help self-employed home buyers
Our brokers have access to over 50 lenders and know the ins and outs of the mortgage application process. They can give you a clear understanding of what you need as a self-employed home buyer and answer any questions that you may have. To find out more, contact one of our trusted Mortgage Professionals for a FREE, no obligation consultation to discuss your financing options today.
Source: Duffie Osental – Home Trust