If you are an entrepreneur and run your own business — or are a gig worker or independent contractor — you’ve probably found that it is a bit more challenging to qualify for mortgage financing than it was when you had a steady paycheck or W-2 income.
While self-employed mortgage borrowers can apply for all the same loans that “traditionally” employed borrowers can, buying a home as an entrepreneur comes with a host of unique challenges. The most common of these include:
- The need to close before you have two years of tax returns
- Aggressive tax deductions that reduce your income and prevent you from qualifying for traditional loans
- The need for a jumbo loan amount with minimal money down (to keep money invested in your business)
- Being able to compete and close quickly in a tough housing market
These challenges are compounded by the fact that different mortgage programs and lenders have their own criteria when it comes to documenting self-employed income.
Luckily, there are alternative solutions available to you. If you are a self-employed business owner and are having trouble qualifying for traditional home financing, an Entrepreneur Home Loan might be the solution you are looking for.
What Is an Entrepreneur Home Loan?
Entrepreneur Home Loans were created to overcome the roadblocks self-employed home buyers face when applying for traditional mortgages. These programs allow entrepreneurs to secure home financing with fewer restrictions than conventional loans when it comes to documenting income and assets.
There are two main types of Entrepreneur Home Loans:
1. Alt-Doc Programs.
Alt-doc loan programs allow self-employed borrowers to qualify for home financing using either their bank statements (personal or business) or business Profit-and-Loss statements. For bank statement programs, 12-24 of statements are required to prove income. For P&L programs, two years of P&L statements verified by an accountant are required.
These programs are generally used by business owners who have been in business for at least two years but have not filed their second-year taxes yet, or those whose tax returns do not show enough income to qualify for a traditional mortgage.
2. Asset Qualifier Programs.
Asset qualifier loans (also called ‘asset depletion loans’) allow self-employed borrowers to qualify using their liquid assets instead of income.
These types of loans are perfect for self-employed borrowers who do not have the stated income required to qualify, or who have not been in business for two years.
Finding the Right Mortgage Lender
As you can see, there are plenty of options available to self-employed entrepreneurs who are not able to qualify with traditional mortgage financing.
However, the challenge then becomes finding a mortgage lender who offers each of these programs and can help you decide which solution is the best for you and your financial goals.
NEO Home Loans has a variety of Entrepreneur Home Loans available for self-employed home buyers. Whether you are looking to qualify with your tax returns, stated income, bank statements, or asset documentation, we’re confident we have the perfect loan program that will fit your needs and allow you to qualify for your next home with the lowest possible cost.
Features of our Entrepreneur Home Loans include:
- Alt-doc, bank statement, and asset qualifier loans available
- 90% financing up to $1M
- Credit scores as low as 680
- 2-unit properties allowed
- Second homes allowed
- Investment properties allowed
- Gift funds acceptable
- Cash-out refinance and purchase loans available
- Programs available to J1 Visa holders
How to Get Started
Whether you’re purchasing your first home or refinancing your current one, an Entrepreneur Home Loans is a great option to help you qualify for mortgage financing.
Our mission at NEO Home Loans is to help entrepreneurs navigate the landmines that come with buying a home. We have helped many self-employed home buyers select and qualify for the mortgage program best suited to reach their financial goals.
If you are self-employed and have had trouble qualifying for a traditional mortgage program, visit https://www.homeswithneo.com/entrepreneur-home-loans/ to schedule a consultation with a mortgage advisor and learn more about our Entrepreneur Home Loans. They will answer all your questions and educate you on the available programs so you can be happy with a mortgage solution that works for you!