Mortgage Options for Self-employed

People’s employment status affects their chance of getting a mortgage. But what about people that are self-employed? People that are self-employed are still eligible for a mortgage. However, getting a mortgage is usually a bit harder and more expensive for them. Most lenders are worried to see the fact that they don’t earn steady income like employees to make their monthly mortgage payments. Some lenders even simply refuse to give loan to people that are self-employed because of the extra risk and paperwork involved in the whole process. But if you are a self-employed, you must not let these facts discourage you from trying to get a mortgage. There are lenders that provide mortgage products that are suitable for people who are self-employed.


First, you have to understand that lenders are not seeing people that are self-employed as their ideal borrowers. If you manage to get a mortgage, you will definitely have to pay higher interest rates compared to people that are employees. The rates that you see when you visit the websites of lenders are rates for prime borrowers, and those are not the ones that you will be paying because you don’t have steady income like them. Because you are a less attractive candidate for lenders, you may not be able to get a lot of options and negotiate to get a lower interest rate. You will also need to put up some extra effort to find lenders who are willing to provide loan for people who are self-employed like you. One more thing that you need to prepare when you want to apply for a mortgage as a self-employed is a larger down payment.

The subprime mortgage crisis made it even harder for people who are self-employed to get a mortgage because banks are trying to avoid risky investments. However, you can still get one of the following loan types:

1. SISA (Stated Income/Stated Asset Mortgage)

In this type of mortgage, you can tell the bank how much your income is, and the bank will not do anything to verify it. However, the bank will check your sources of income. Usually, you will need to provide a list of your recent customers or clients and your other sources of cash flow. You may also list your income-producing investment if you have one.

2. No Documentation Loan

If you are a self-employed but your tax returns show that your business has a very low profit or even loss, this type of loan may be a good option. In No Documentation Loan, the lender will not verify your income information that you provide. However, because this kind of loan is considered high-risk by the bank, you need to prepare to pay higher interest rate compared to other types of loans with full documentation.

If you can’t get any of the options mentioned earlier, you can try to get a joint mortgage with a trusted friend or relative who is an employee. Getting a joint mortgage is easier than getting a SISA or No Documentation Loan because it is safer to the lender.