Loading guides
Self-employed, freelance or variable pay? How to document income so a lender can say yes.
Underwriters look for income that is likely to continue. For self-employed and freelance borrowers, that usually means two years of tax returns and a profit-and-loss statement that match each other. Variable pay from commissions or gigs gets averaged.
Months before you apply, gather returns, 1099s, invoices and bank statements. Pay down credit cards and avoid opening new accounts. Keep business income flowing into a business account so deposits are easy to trace.
Some lenders offer programs that evaluate bank deposits instead of tax returns, often with different rates or down payments. A mortgage broker can compare several at once. Ask your agent for lenders they have worked with on similar files.
Underwriters may ask about large deposits or gaps. Answer promptly and keep your explanations simple and documented. Calm paperwork is fast paperwork.
Many lenders want two years of history, though exceptions exist. A loan officer can tell you what applies to your situation.
It can, because lenders look at net income. Talk to your accountant and a lender before filing if a purchase is near.