How To Buy a House While Self-Employed

4 Loans for Self-Employed Buyers

1- FHA
FHA loans allow you to buy a house with a lower down payment and a lower qualifying credit score than a conventional loan. If you’re a freelancer with regular work but not much in the way of savings or credit history, this can be a great mortgage option. You must be able to show and prove all of your income, debt, and savings for your new home purchase. Be ready with all of your profit and loss information for the past two years and possibly your business tax returns.

2- Conventional
A conventional loan is another good option for buying a house while self-employed. Conventional loans have more flexibility in terms of what sort of property you can buy—including a rental or vacation home—and they allow you to borrow a higher amount. You will need documentation of all of your qualifying income, including 1099s, receipts, and other financial records. If you have stable, continuous clients who have paid you consistently over time, this is usually straightforward. Just like if you had W2s from an employer, a 1099 home loan will still consider your Debt-to-Income (DTI) and previous credit history for qualification.

3- Non-QM Loan
Another option for a self-employed or freelance home buyer is a non-QM loan. This loan is for people who do not have a stable income, can’t show documentation for two years of income history, or have lower credit scores. For example, if you make money in a variety of different ways and don’t have the same clients month-to-month, it may be difficult to provide the full documentation needed for a conventional loan. Non-QM loans operate in ‘good faith.’ As long as you can prove that you can pay back the mortgage, this is an option for you. Even with a slightly higher interest rate, it is an excellent option for a self-employed individual buying a house.

4- Refinance Cash-Out Loan
Being self-employed doesn't mean you have to miss out on the exciting perks of equity in your home. If you own a home and want to refinance to leverage equity, self-employed homeowners have the option of a cash-out refinance. Be prepared to produce documentation on your income just as you would for a conventional loan.

Get your 1099 Home Loan Through Cake

Home buying should be like biting into a cake, sweet and easy. At Cake, we look forward to helping you find the right loan for your new home purchase. Whether you go with an FHA, conventional, non-QM loan, or you refinance a current home, Cake has options for you to buy a house while being self-employed. Start your application now or call to speak with a professional consultant about your new home mortgage.