Getting through the complex process of securing a mortgage from a conventional lender is anyway complex and tedious, but it becomes really daunting when you are a self-employed professional. Being self-employed offers freedom in life, but when you are in the market looking for a home, you will face more difficulties than a salaried employee. The reason? Well, the lenders will consider you a risk because you are probably not making a stable income.

At Buyer Investor Match, we help self-employed professionals buy their dream homes with owner financing after they have been turned down by conventional lenders. Since our program doesn’t require any credit check or income verification, they get through the home buying process quickly and without any hassles.

While working with self-employed individuals, we’ve identified certain challenges that they face when buying a home. Let’s discuss what they are and how you can deal with them:

Difficulty in proving your income

In order to save on taxes, self-employed professionals usually try to minimize their income on the ‘record’ by claiming deductions for the operating costs of their business. They will show the minimum possible income in the documents in order to reduce their tax liabilities; however, when they apply for a mortgage, this tax saving ‘strategy’ proves a bit damaging. Your lender would want your income to be large, not small.

Fluctuations in income

Since you are not a salaried employee, you may not be making a fixed amount of monthly income. One of the factors that the lenders take into consideration when reviewing a mortgage application is the applicant’s ‘income-to-value’ ratio. It is basically the ratio of your income to the value of the property you are buying. If you don’t make a fixed amount of income every month, it will become a bit difficult for the lender to come up with an ‘income-to-value’ ratio in your case.

Credit score issues

When you apply for a mortgage, your credit score will be one of the most important factors that the lenders will take into consideration. It is anyway difficult to get a mortgage with a low credit score, but if you are self-employed it is going to be almost impossible. Lenders offer the best mortgage deal only when you have a great credit score. (Related article: How can owner financing help you build your credit score?).

So, how to overcome these obstacles?

If you are struggling to obtain a mortgage from a conventional lender, one of the best options for you is owner financing. Under an owner financing arrangement, you will borrow from a real estate investor from our network at a slightly higher interest rate, instead of a bank.

If your mortgage application was turned down due to your low credit score, owner financing is a great way to rebuild it. As you will make your monthly payments, your credit score will go up. Your monthly payments will be reported to the credit bureaus by a third party note servicing company which will handle financial transactions under our Buyer Investor Match program.

Once you have built your credit score, you can refinance the loan with a bank and pay off your owner financing debt. (Related article: Refinancing your mortgage in owner/seller financing: Is it possible?)

Other benefits include:

• No balloon payment
• You can pay off your loan in 30 years (If you decide not to refinance)
• No pre-payment penalties
• No credit check
• No income verification
• No time on job requirement

Interested in learning more about our program? Just click on the button below to set an appointment with us using our online scheduler…