Loan Approval for Self-Employed Home Buyers


Self-employed and dreaming of owning a home this year? Welcome to the Potempa Team’s guide to loan approval for self-employed home buyers. We’re here to break it down, sprinkle in some tips for buying when you’re the boss, and help you sail through the loan approval process with confidence!

What Do I Need to Get Pre-Approved to Buy?

First things first: if you haven’t already, click here to check out our recent blog on the key steps you’ll want to take to get ready to buy. It offers a complete breakdown of the process and what you’ll need to present to your loan officer to get pre-approved for a home loan.

Self-employed home buyers should plan to present extra documentation. You’ll need to show that you’ve been running your business steadily for at least two years. That means providing evidence like emails from clients, a business license, letters from your CPA, or proof of membership in a professional organization. Your lender will also want to see that you’re making enough to handle a mortgage, so gather up your personal and business tax returns for the last couple of years, plus bank statements to prove you’ve got the funds. If you’ve been in business for less than two years, don’t stress! You can still usually qualify if you’ve been active for at least twelve months straight. Just remember, it’s all about showing that you’ve got the income to handle the mortgage payments and the financial stability to be a good loan candidate.

What Are Some Tips to Increase My Chances of Loan Approval?

Our tips for loan approval for self-employed home buyers don’t look that different than a W-2 employee:

Check Your Debt-To-Income Ratio: Your debt-to-income ratio (DTI) is like a financial snapshot for lenders. Keep it below 50% by trimming down your debts before applying for a mortgage. That way, lenders can see you’ve got room in your budget to handle a mortgage and the associated costs of owning a home.

Keep an Eye on Your Credit: Aim for a high score by paying bills on time and keeping your credit card balances low. If your business expenses tend to blend with personal ones, consider separating them to present a cleaner credit profile.

Consider Alternative Loan Options: At the Potempa Team, we have a wide variety of home loan options available to suit your unique situation.

Be Ready to Make a Larger Down Payment: Sometimes, a bigger down payment can speak volumes. It shows you’re serious and reduces a lender’s risk, potentially scoring you a lower interest rate.


Ultimately, loan approval for self-employed home buyers usually comes down to an applicant’s financial strength, readiness to buy, and ability to handle the costs of both a mortgage and homeownership. To speak with a member of our team and take the next steps to buy this year, click here!

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