Buying a home can be one of the most exciting investments you’ll make during your lifetime. But as you know, buying a home is more than just analyzing neighborhoods and a particular front porch’s relaxed factor.
You may need to tap into a mortgage lender — and if you do, you’ll need to be pretty open about your job, your income and other assets. Self-employment can make all of this a tad more complicated. Benzinga has compiled expert advice so you’ll be able to hone in on the best mortgage lenders for your employment situation.
Best Mortgage Lenders for Self Employed
Getting a mortgage without a traditional job and tax return is possible, and Benzinga rounded up a few lenders that can help.
1. Angel Oak Home Loans
Angel Oak Home Loans is a full-service mortgage lender offering traditional and portfolio mortgage loans. Among their many customized loan solutions is their Bank Statement product for self-employed borrowers. This loan does not require tax returns and includes a 1099 Income option for 1099 earners.
- Loan amounts up to $3 million
- 12 or 24 months personal or business bank statements
- Two years out of bankruptcy, short sale, foreclosure, or deed-in-lieu
- Owner occupied, non-owner occupied, second homes
- 1099 option available
- 40 year fixed interest only
- Delayed financing available
- Non-warrantable condos allowed
Angel Oak Home Loans offers a wide range of loan options allowing you to obtain any mortgage as long as qualification requirements are met. You can also refinance into any of these loans. The customer service team is easy to reach via email, phone or the online contact form, and you can begin your journey by searching for a local advisor right on the website.
Angel Oak is headquartered in Atlanta, Georgia and is licensed in AL, AZ #0927070, licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, CO, CT, DE, DC, FL, GA #32379, ID, IL, IN, IA, KS, KY, LA, ME, MD, MI, MN, MS, NV, NH, licensed by the N.J. Department of Banking and Insurance, NM, NC, OH, OK, OR, PA, Rhode Island Licensed Lender, SC, TN, TX, UT, VT, VA, WA dba AOHL LLC, WI.
2. New American Funding
New American Funding is a wonderfully transparent lender that is easy to work with. When you Visit the New American Funding website, you can quickly see the day’s rates, receive a quote and apply.
Because everything on the site is easy to read and review, you know what is happening before you start the process. You can easily return to the site at any time for service, and you can even read additional information that explains the mortgage process, including documents, down payments, closing and more.
Mortgages are available in the District of Columbia and every state except for New York and Hawai’i.
3. North American Savings Bank
When you want a bank statement-only loan, you can turn to North American Savings Bank because the firm only asks that you provide 12 months of consecutive bank statements to qualify when you’ve been in the same line of work for many years. While most other banks expect you to provide years and years of statements, NASB knows that you might have begun your self-employment timeline sooner rather than later, even though you’ve been working for quite some time.
You can obtain loans from around $200,000 to $1 million while putting 10% down on the loan itself. Put 10% down with mortgage insurance or pay 20% down to eliminate your PMI. A high 45% debt-to-income ration makes it easier to qualify, and you are required to escrow your taxes and insurance (which is convenient at the end of the day.)
4. Luxury Mortgage
Luxury Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. Luxury Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.
It's also easier to get approved if you're self-employed. Tax returns are not required and you'll only need one year of self-employment income history and a minimum credit score of 580. Luxury Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.
Luxury Mortgage is licensed to lend in Connecticut, Georgia, Illinois, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Washington.
5. Rocket Mortgage®
Rocket Mortgage® is one of the top-rated lenders by their customers.
Rocket Mortgage® offers many types of mortgages, including government-backed and adjustable-rate mortgages (ARMs).
Rates are consistent with the market and Rocket Mortgage® helps you get approved even as a self-employed individual.
What to Look for in a Mortgage Lender
It’s not always a good idea to be picky when you’re looking for a mortgage — each mortgage application puts a hard inquiry on your credit. Do your homework ahead of time and you might be able to avoid unnecessary dents in your credit.
Ask yourself several questions as you evaluate mortgage lenders:
1. What Interest Rates do they Offer?
Always compare various lenders’ interest rates, which tell you how much money you’ll owe the lender over time. You’ll also have to consider the terms of the loan — such as whether or not the rates are fixed or adjustable, and how many years you have to pay the mortgage — instead of just basing your decision on low rates. A fixed rate means that the interest rate you were given when you took out the loan will never change for the life of the loan, whereas adjustable rates can change.
2. What will the Down Payment be?
You’ll want to know how much you’ll have to put down if your lender asks for a down payment. A down payment is a deposit you’ll have to put down when you buy a home. Don’t forget to consider closing costs — such as appraisal costs and property taxes — because you’ll need to include that in your savings as well. Self-employed individuals are required to put down more money (roughly 20% total) than those who are not self-employed, especially if you don’t have tax returns or meet other requirements that lenders usually ask for.
3. What Terms are Available?
There are terms on a mortgage that dictate how long you have to pay it back. These generally range from 5- to 30-year terms. Will you be able to adjust the terms if your financial picture changes at some point in the future? For instance, will you be able to switch to a 30-year loan if you need to?
4. What do I Need to Provide in Order to Get Approved?
Most mortgage lenders require more or less the same documentation — including, but not limited to — your tax returns, bank statements and credit report. Ask plenty of questions about the extras you’ll need to provide because of your self-employed status.
Tips for Finding the Best Mortgage Lenders for Self-Employed
You’ll also have to find a lender that’s willing to work on you based on your unique employment and tax situation. Here are some tips for finding the best mortgage lenders for self-employed:
1. Look into Your DTI Ratio and Raise Your Credit Score.
Your debt-to-income (DTI) ratio is the amount of debt you have in relation to your income. All you need to do is divide the minimum monthly payments of your overall debt by your monthly gross income — and shoot for a DTI of 50% or less.
Check factors that can increase your credit score as much as you can. Your credit score is a number that tells lenders how reliable you are when you pay back loans or other debt. The higher your number, the better your chances are at getting a mortgage — and one with a low interest rate. Reduce as much debt as you can — credit card bills, student loans, etc.
2. Be Upfront.
You will be asked about your job and your income, whether it’s through filling out a form or when talking on the phone. There is no use in stretching the truth or avoiding the question. Be honest about being self-employed, because you will likely have to prove what you say with a bank statement or tax return. You may need to go through prequalification or pre-approval processes — prequalification offers less stringent checks on your income and other assets and pre-approval requires a more in-depth check on income and other documents.
3. Get Your Documents in Order.
Gather the right documents to streamline the process and demonstrate to your loan officer and your prospective real estate agent that you’re ready to get the process started.
4. Prove at Least 2 Years on the Job.
Your mortgage lender will look to see if you can prove steady income from the same job for at least 2 years. This can mean having your own company or client(s) that have consistently paid you during this time.
Find the Best Lender for You
Many mortgage lenders rely on the traditional process for lending money to homebuyers — asking applicants for documents and numbers that self-employed you may not have. There are a lot of lenders that can offer you other ways to take out a mortgage loan. Follow these tips and do your research so you find the right lender that’s willing to work with your personal situation.
Get Ready for Take Off
Rocket Mortgage® is an online mortgage experience developed by Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.
You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.