In order to assess your financial stability and capability to repay a loan, mortgage lenders often require that you provide some type of financial information to document the source of your income, such as pay stubs and information about past and present employers. If you're self-employed and looking to finance your home through a mortgage, you may find it difficult to provide paperwork to reflect your financial situation accurately. As a result, it can be harder for you to get approved for a loan. However, most lenders will accept federal and state tax returns, signed profit-and-loss statements for the two previous tax years, and possibly bank statements as proof of income from self-employed borrowers. The documentation you'll be required to show will vary among lenders and can depend on your down payment and type of loan you're applying for. There are non-conventional mortgage programs available that are specifically designed to help self-employed home buyers to qualify for a loan. These programs usually involve no-document loan applications that don't require you to provide income, employment, or asset documentation and allow greater flexibility in loan qualification. However, no-document mortgages generally have slightly higher interest rates and are offered by fewer lenders. Another option to consider is an adjustable-rate mortgage, as these loans typically work well for self-employed borrowers because your income and interest rate will usually fluctuate along with the market.
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