Navigating Mortgages as a Newly Self-Employed Professional

Are you among the growing number of individuals who’ve taken the leap from salaried employment to self-employment?

This shift in career trajectory is becoming increasingly common, either by choice or as an opportunity presented by your employer. Regardless of how you’ve made the transition, one question that often arises when self-employed is, “How will this affect my ability to secure a mortgage?”

The good news is that if you’re self-employed in a similar industry and performing a role similar to your previous job, you might not need to provide two years’ worth of tax returns to obtain a mortgage.

Mortgage lenders, in such cases, are typically content with just one tax return from your newly self-employed venture.

Transitioning Within the Same Industry

When you’ve shifted from being a salaried employee to a self-employed professional within the same industry and role, the mortgage application process becomes relatively simpler. Mortgage lenders understand that you possess the expertise and experience necessary to excel in your new venture. Therefore, they may require only one year of tax returns instead of the customary two.

This can significantly expedite the mortgage approval process and make your transition to self-employment more seamless. It’s important to note that you’ll still need to provide various documents typically required for self-employed individuals, such as business licenses and invoices. However, the reduced tax return requirement can be a game-changer for many newly self-employed individuals.

self employed business woman working at her desk with computer and papers and bottle of water

Venturing into a New Industry

If your transition involves stepping into a completely new industry or role, mortgage lenders will understandably be more cautious. In such cases, you lack a proven track record in your new field, which could make lenders hesitant to approve your mortgage application.

Apart from the standard documents required for self-employed applicants, such as business licenses and invoices, lenders will typically ask for 6 to 12 months of bank statements, especially if you opt for a stated income program. A stated income program allows you to declare your income, but lenders won’t simply take your word for it. They’ll meticulously review your bank statements to ensure that your stated income is reasonable.

In this process, lenders calculate your revenue by tallying your deposits and subtract your expenses to confirm that your declared income aligns with your financial activities. This helps ensure the accuracy and validity of your mortgage application.

slocan lake view from highway 6 looking north towards Silverton, BC meadow of flowers, trees surrounding a spectacular lake bordered by towering mountains

Special Programs for Newly Self-Employed Individuals

For those who’ve recently become self-employed, mortgage insurers offer specific programs tailored to your needs.

These programs can enable you to qualify for a mortgage with as little as a 5% down payment on a home, making homeownership more accessible during this transitional phase.

In Conclusion

If you’re a newly self-employed individual and find yourself in need of a mortgage, don’t be discouraged by the initial hurdles. There are options and programs designed to cater to your specific circumstances. Whether you’re in the same industry or exploring new horizons, there are pathways to homeownership for self-employed professionals.

If you’re seeking guidance on securing a mortgage as a self-employed individual, I’m here to assist you. Feel free to reach out today and let me lend a helping hand as you navigate this exciting phase of your career and homeownership journey.

Contact Huber Mortgage to talk through your options! Contact HERE.