Self-Employed? Now is the Time to Prepare Purchase a Home in 2021

The New Year is the time to hit the reset button and start fresh. It is also the ideal time for those who are self-employed to prepare to purchase a home in 2021.

Self-employed borrowers are expected to produce evidence of their last two years in tax returns for loans over $753,250 and one year in tax returns for loans under $753,250.

How you show your income is key to getting approved. One of the most common issues self-employed borrowers encounter is differentiating between how much they claim they make and the amount the government decides they actually make in net income, according to their tax returns. Fannie Mae, Freddie Mac, and FHA base their lending decision on net income. After factoring in tax write-offs and other business expenses, many self-employed borrowers are surprised to learn there is a significant difference between their gross revenue and their net income.

The key to obtaining financing is to meet with an experienced loan officer who can review your 2019 tax returns and explain what income will need to be shown in your 2020 tax returns to qualify for the loan you want.

2021 is off and running. With interest rates remaining low and demand high, financing is key and who you work with is more important than ever. San Diego Funding and Great Pacific Funding's experienced loan officers are here to help you succeed and take advantage of today's market.

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.