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• Self Employed Georgia Mortgage Lenders

About Georgia Self Employed Mortgage Lenders

If you’re one of the 1000’s of Georgia self-employed workers that write off to much income to qualify for a Georgia mortgage? it is now easier than ever to be self-employed get approved for a Georgia mortgage if you are self-employed and have sufficient income and payment history you can now qualify for a bank statement only Georgia mortgage. Fannie Mae has relaxed some of their guidelines for documenting self-employed income. Even today Georgia self-employed mortgage applicants are having trouble betting approve for their Georgia dream home.  Here we have provided the much-needed information to help you get approved for a self-employed mortgage loan using bank statements only to document your income and ability to make the Georgia mortgage payments. 

How Long Must You Be Self Employed in Georgia To Qualify? 

Most Georgia mortgage lenders that provide self-employed mortgage loans want to see proof of at least 2 years business history. Some Georgia self-employed mortgage lenders only require 12 months personal bank statements but still want proof of stability for at least 2 years. For self-employed Georgia business owners using business bank statements 24 months business bank statements are required and a Georgia profit and loss statement signed by the Georgia business. NO Tax Returns Needed!

SELF EMPLOYED Georgia MORTGAGE APPLICANTS CAN NOW QUALIFY FOR LESS THAN 2 YEARS SELF EMPLOYED! Here’s more good news for our Self Employed Mortgage Applicants! Self Employed Georgia Mortgage Lenders Home Loans, Inc. may be able to approve your self-employed borrowers, even those with a history with less than two years of self-employment.  These applicants may qualify for our Fresh Start, Homeowner’s Access and Premier Access products. When qualifying these borrowers, our underwriters look for: At least two years of previous employment in the same line of work in which the borrower is now self-employed At least one year of employment, plus formal education or training in the same line of work. Proof that the borrower’s income is stable and is expected to continue Substantial compensating factors that address the borrower’s ability to repay.

 Self Employed Income Using Tax Returns Make it Hard To Qualify

A borrower’s income is still probably the single most important factor in qualifying for a Georgia mortgage. For traditional Georgia mortgage lenders to know what you earn, they will want to see at least the last two-years of a self-employed borrower’s Schedule C from an IRS Form 1040. Schedule C is the tax form that represents the income or loss from your Georgia business. If income increases between year one and year two, Georgia mortgage lenders will take an average of the two years. However, if the second year’s most recent income is lower than the first year, Georgia mortgage lenders are required to use the lower number. With our bank statement only mortgage program this is not an issue because the lender will add u p your most recent 12 or 24 months bank statements and average out your income.

Self Employed Georgia Mortgage Loans

If you’re going to mortgage your Georgia home purchase with traditional financing that is conforming to Fannie Mae and Freddie Mac guidelines you will be required to fully document your self-employment income via adjusted income on your 1040 tax returns. It is standard that  Fannie Mae will want a full 2 years worth of tax returns to document your net income after expenses. For many Georgia self-employed mortgage applicants to provide this requirement can be difficult for self-employed Georgia business owners.

If you’re purchasing a new Georgia home or refinancing your existing Georgia mortgage there is a specific process Georgia self-employed must go through to get approved for a Georgia mortgage. Under the old guidelines, self-employed works had difficulty qualifying based on proof of income. This happens for a variety of reasons including how a business is structured most importantly how much income you write off as a self-employed Georgia mortgage applicant.

Georgia self-employed workers have no history of paychecks that can be documented because the employer usually pays the w2 employee expenses. They take may take distributions with no regular amount or frequency making qualifying based on income difficult even with bank statements and tax returns.  If your business is new and you don’t have documented sources of revenue or even two years of federal tax returns this can make qualifying for a traditional mortgage difficult, if not impossible.

If you have a history of paying yourself from your Georgia business, Fannie Mae’s guidelines state that your business only needs to have adequate income to support your future distributions. Most Georgia mortgage lenders will require documentation that your Georgia business is legitimate and stable. This could be provided in the form of your letters of incorporation or the K-1 filing which highlights your percent Georgia business ownership.

The underwriting process is still going to be more complicated for Georgia self-employed mortgage applicants. Fannie Mae and Freddie Mac have similar processes to verify income from Georgia self-employment.These requirements follow the ability to repay guidelines to ensure that you have adequate income from Georgia business owners ability to repay the loan. Georgia mortgage lenders adhere strictly to these guidelines so that the loans can be sold to Fannie Mae and Freddie Mac.

If you don’t have two years of business tax returns the guidelines you may be able to qualify for a bank statement program using your personal bank statements as an alternative to a conventional mortgage. These types of programs are available from boutique portfolio lenders and offer reasonable rates and fees.

Roadblocks for Georgia Self Employed Mortgage Applicants

The most common roadblock Georgia self-employed workers face is proving how much your net income is from the business based on tax returns and deductions. Georgia self-employed mortgage applicants may have significant cash flow in your business but could be in for a shock when you learn your qualified net income based on tax write-offs and expenses for your business. If you cannot demonstrate sufficient net income from your business it still may be possible to qualify for a bank statement program using income on your personal statements.

Georgia Business Tax Deductions Lower Documented Income

Running a business as a self-employed worker can be very expensive and often comes with significant tax liability. The temptation can be to lower your taxable income with deductions. These deductions include business expenses for things like equipment, expense accounts, and annual depreciation.

Taking business deductions may save you money on your taxes but it could make it more difficult to qualify for a mortgage. As a self-employed worker, you are qualified for a mortgage based on your net income, not gross income for a traditional worker.

Most self-employed business owners claim as many tax deductions as the law allows which significantly lowers your net income and therefore your ability to qualify for self-employed home loans.

Debt to Income Ratio for the Georgia Self Employed

Maintaining a low debt to income ratio is important in qualifying for any mortgage loan. As a self-employed worker, your debt to income ratio is calculated differently from traditional workers.

Your debt ratio is calculated by your average net income from the most recent tax returns along with current year income and expenses. In order to be approved for a self-employment mortgage, your debt-to-income ratio cannot be more than 43 percent.

If you’re considering purchasing a new home or refinancing your existing mortgage you might want to consider taking fewer tax deductions to reduce your debt-to-income rate with the highest possible net income.

Georgia Mortgage Documentation Makes a Difference

The loan process you’ll go through as a self-employed business owner is the same as everyone else. Where it gets sticky is providing your income documentation. The more you have to prove that business income is sustainable and able to pay the easier the process becomes to qualify as a self-employed Georgia business owner.

Keeping accurate records of income and expenses will make it easier to prove that you are a sustainable business as well as documenting net income which is required for maintaining a favorable debt ratio.

Mortgages for Georgia Self Employed Business Owners

Georgia Mortgage lenders generally consider self-employed business owners to be higher risk than those who work for a traditional paycheck. Higher risk Self-employed Georgia business owners pay more at closing and over the life the loan with higher interest rates. If you’re accepting a higher interest rate when you purchase your Georgia home you may be able to lower that rate down the road by demonstrating a reliable payment history and refinancing.

How You Structure Your Georgia Business Matters

There are several different ways to be self-employed and underwriters treat them all differently. The most common business structures include sole proprietorship, partnerships, LLCs and S corporations.

Under a sole proprietorship, your business income is reported on schedule c of your tax return. With a partnership profits in the business are split between partners based on their respective percent of ownership. Limited Liability Corporations are considered pass-through entities for tax purposes. S corporations follow strict guidelines for distributions. Depending on how you structure your business you could potentially pay yourself on a w-2 and avoid the hurdles of a self-employed mortgage completely. Your accountant can help you choose the optimal business structure for your company.

No matter how you choose to structure your business there are steps you can take to maximize your income from self-employment and maintain an optimal debt ratio. All of these factors are under you control and are part of maintaining healthy finances as a self-employed worker.