How to Get A Mortgage If You Are Self Employed

How self employed get mortgages by avoiding these biggest mistakes! In this video I talk about the five biggest mistakes self employed people make when applying for mortgages and how you can avoid them. I have helped countless business owners with self employed mortgages over the past 16 years as a loan officer, and consistently see the same mistakes over and over. Don't repeat these, learn the most common pitfalls so you can navigate them and get approved for your own self employed home loan!If you want to learn how to get a mortgage when self employed, you're in the right place 👍

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Video Transscript

I get a paycheck and I get a W-2.

So it doesn't matter that I own the company.

Wrong, big, wrong.

Are you self employed?

Stick around to the end of this video

to find out the five top reasons that your mortgage loan could be denied?

I say that with a smile, but it's a serious topic.

This is your one stop shop for anything and everything. mortgage education.

I drop new videos every Tuesday and Saturday.

These are gonna be your top five biggest mistakes that self-employed borrowers make when they're applying for their mortgage loan.

Mistake number one: saying that you've provided everything when you haven't.

So here's what I mean by that.

When you're self employed, there are so many different variations of this.

You could have a schedule C, you could have a schedule E, you could have a K-1, you could have an S corp, you could have a C Corp. 

All of these are intricate pieces to a puzzle and everything fits together. 

So sometimes a customer that's self-employed might say,

"look, I've sent you every page of that return.”

"Oh, I don't have a K-1 for that." Or "there's not a separate return for that."

You know, really surprisingly, a lot of us don't pay enough attention to our tax returns, how they're filed and what goes into those, right?

So if your loan officer says, "Hey, I'm missing the schedule. I'm missing this piece, I'm missing this page."

Trust me.

They know that they are because we can see it when we're looking at what we do have.

That little piece that's missing, leads us to know that there's somewhere else we have to go to get it.

So mistake number one, again, is not providing everything and saying that you have.

Mistake number two: providing tax returns that have not yet been filed and or transcribed by the IRS.

So what that means is sometimes I'll get tax returns and I'm like, cool, everything's good, blah, blah, blah.

We're going through the whole process.

And now we go to the IRS to get them transcribed, to make sure that what your lender has and what you've provided are one and the same.

And, oh my gosh, possibility number one, there is no transcription available because you haven't filed them yet.

It's a huge, huge, huge, no no. Mistake number two in part of mistake two, is that you have drafted them, you know, like I said, not filed them or you sent us the draft.

And then there were a couple of edits and then they were filed and you forgot to send the update.

So now what is transcribed by the IRS and what we're trying to validate are not gonna match, and that can get you denied.

Mistake number three: not disclosing all the businesses that you own.

Don't forget guys. And listen, it sounds crazy.

You're like how can you forget you own a business? But we all can, right?

Let's say that you have a side business selling Mary Kay or Melaleuca.

A lot of people forget to disclose that, then we get a tax return and guess what?

There's a business there that we didn't know about.

And now we have to have information on.

So things like that, you know, or maybe there was a two years ago on the tax returns that you're providing to us.

You had a business that you launched for three months and then were like, this is not gonna work.

Something online, whatever. Right?

But when we're getting that two year employment history, and we're getting that paper trail, everything needs to match like a puzzle.

So don't forget to include all of the businesses that you own.

Mistake number four.

Number four is not being active and/or not even being filed with the Secretary of State.

So if you tell me that you're gonna qualify with your business, ABC123, we are going to get copies of those returns, could be filed on your personal, might be filed on a separate return, depending upon how you're structured, right?

Either way, we're gonna get copies of those returns that include the business.

Then one of the other verifications, in addition to getting the transcription from the IRS to basically audit that we have the same thing they do.

We're also gonna look up your business. 

Do you have a yellow page ad? Do you have a white page ad? Do you have a Facebook? Do you have a website?

And most importantly, we're gonna look you up on the Secretary of State.

Looking to make sure that the owners match what you have disclosed looking to make sure that the name matches what you have disclosed.

We're checking reference points of addresses listed for the business that you've disclosed. And we're also making sure that you're active with your annual reports with the Secretary of State.

So if your loan officer goes to pull up and we see not active with the Secretary of State, that's gonna kind of hold up the process.

'Cause we're gonna have to say, "Hey, go file your report, pay your $25 and get yourself up to date."

Mistake number five.

Have you made it to the end with me?

Mistake number five.

How many times have I heard this?

"I get a paycheck and I get a W-2. So it doesn't matter that I own the company."

Wrong, big, wrong. 

So even though you get a paycheck, even though you W-2 yourself, it does have to be disclosed if you're self employed and all that information does have to be paper trail.

So let's say in one example of many that are available, that you file as an S Corp and you W-2 yourself.

So we still need pay stubs, we still need W-2s, still need the S Corp tax returns if you own more than 25% of the business.

So that we can make sure that you actually have the money to W-2 yourself. 

So that's mistake number five, I always try to provide something tangible in addition to the videos. So I'm gonna drop a link below to my home loan checklist.

The long version.

Where I actually list out the items you'll need.

And then I give some explanations behind that.

So wanting to see sample would be bank statements.

You need bank statements.

Sometimes one month, sometimes two, not a screenshot, not a picture, a bank statement, not the first page, all the pages.


And this is the important part. 'Cause people like to understand the why.

A screenshot could have been doctored up, page one could have been doctored up.

We are looking at the banking institution, validating that it's on the bank letterhead or however, whatever word you want to use for that.

It's on their paper, whatever.

And we are validating the current balance.

We're looking for any big deposits in, any large withdrawals out like wanna make sure you're not buying two houses at once and didn't tell us about the other one.

As one example.

And looking to see every single page so that again, the full puzzle has all the pieces and it's put together. And because on page one, it might say you have a hundred grand in there, but guess what?

Page five might say that you have taken a loan against 95,000 of it. And that makes a difference.

Hope you enjoy the checklist. And I hope it helps.

Drop me a comment below.

Say yes.

A big yes. In all caps, if you're self employed and some of this stuff is making sense to you, I love your feedback.

If you enjoyed this video, please, please like the video.

I would love a comment.

Please subscribe to the channel and share with your friends.

I'm really trying to explore and share my passion of spreading mortgage peace around the world.

July 28, 2020
Mortgage Tips