When freelance careers take off, they can become very lucrative. Freelancers have the power to set their own rates and hours, which means that once they enter the right corner of the market, their income potential can take off. Despite this, however, many freelancers have trouble getting pre-approved for a mortgage. The good news is that getting a mortgage as a freelancer isn’t impossible; however, you may have to jump through a few extra hoops. Here, the freelancing experts at CENTURY 21 Jordan-Link & Company share the following tips to help you navigate this process.
If you’ve never bought a home, or it’s been several years, take a look at this foundational info.
- There’s a lot that goes into buying a home beyond the costs. Familiarize yourself with the details involved before you decide to take the leap.
- This article breaks down the different types of mortgages.
- Next, get a clear idea of what documentation is required from freelancers looking to mortgage a home.
Will You Qualify?
Most lenders require specific information to ensure freelancers are a good bet:
- It’s unlikely you can qualify for a mortgage if you’ve been in business for less than a year; however, if you have at least a year, it’s possible.
- If you’ve been on the job long enough, you’ll still need to prove income through bank statements and tax documentation.
- Some lenders will require a larger down payment from freelancers since they’re seen as a riskier investment.
Here’s a look at some common issues you may face during this process:
- If you don’t have a separate business bank account, it could make it harder for lenders to track your income.
- Your year-to-year profits should, ideally, be going up. If they’ve fluctuated, you may need to have more years on the job to prove you’re a good bet for the lender.
- An as-is home can seem like the perfect opportunity, but there could be landmines here. Consult with your estate agent to determine whether you should buy a house as-is.
- Your pre-inspection report could reveal that your dream home is riddled with issues, which could make it harder for your lender to agree to a loan.
Lenders understand that there are inherent risks to freelancing careers, and they respond accordingly when it comes to mortgages. However, that doesn’t mean that you can’t get a home loan. We hope this article helps you figure out the steps you need to take to show the bank that you can afford the house you’ve been dreaming of!
CENTURY 21 Jordan-Link & Company is the largest locally owned real estate covering Tulare, Kings, Kern, Fresno & San Luis Obispo counties with over 280 Realtors® and staff available to assist you in offering a one-stop resource for all your real estate needs. We have four centrally located offices in Visalia, Hanford, Porterville & Bakersfield, serving the entire area with the finest in real estate brokerage services. A Fine Homes and Estates Division, Commercial Division, Farm & Ranch Division and a full-time Relocation Department connected to 6,000 offices, the CENTURY 21® System is the leader worldwide! For more information, please visit our website or contact us today!