Lenders want to see applicants have a stable income, which will be indicated in their income history.
Chicago, IL (PRWEB) June 07, 2015
Although potential home buyers who are self-employed may think lenders will reject them for a mortgage, The Federal Savings Bank always points out to prospective applicants that there are opportunities to improve their chances for a home loan. Whether they are a business owner or a freelancer, self-employed buyers could get the home they want if show lenders they will be able to pay their mortgage on time.
According to The Federal Savings Bank, the following are four ways for self-employed home buyers to increase their chances to obtain a mortgage:
1. Get a co-signer
While lenders may reject applicants because their tax returns do not show their income to debt ratio to be sufficient enough to afford a home, those who are their own boss could get help from a co-signer. Get a co-signer whose tax returns indicate they earn enough income.
2. Opt for a smaller home
Self-employed home buyers can also consider applying for a smaller more affordable home loan. Depending on the amount they seek, a smaller loan may be easier to qualify for than a larger one.
3. Build at least two years of income history
Lenders want to see applicants have a stable income, which will be indicated in their income history. Lenders like The Federal Savings Bank request two years worth of income history which shows if the self-employed applicant has a solid stream of income pay their monthly mortgage payments on time.
4. Decrease debt
Self-employed buyers should work to increase their credit scores to raise their chances for approval. One factor that will affect their credit score is their debt-to-income ratio. Applicants could work to decrease their debt, such as credit card debt, to enhance their debt-to-income ratio and boost their credit standing at the same time.
Self-employed buyers can contact the Federal Savings Bank, a veteran owned bank, to learn more about low rate mortgages.