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CNBC
01-05-2025
- Business
- CNBC
How to get a mortgage if you're self-employed
Applying for a mortgage can be difficult, especially for people with nontraditional income sources, like self-employed workers, small business owners, gig workers, freelancers and anyone else who doesn't receive a W2 from an employer. "The typical mortgage broker has a checklist," Keith Hall, president and director of the National Association for the Self-Employed (NASE), told CNBC Select. "They want to see how long you've been at your existing job, as well as two years' worth of pay stubs." When you're self-employed, "your income isn't as even as someone who gets a regular paycheck," Hall added. So, self-employed workers must "paint a story" of their business and its future, he said, to assure lenders that they're creditworthy. Sole proprietors, independent contractors, partners in a business, gig workers or those who own a business part-time are all considered self-employed, according to the Internal Revenue Service. Generally, anyone who brings in income by doing work that's not documented on a W2, is considered self-employed. Most borrowers want to see that you've been self-employed for at least two years before they consider you for a mortgage. In addition to the documents that everyone needs to apply for a mortgage, such as bank statements and identification, self-employed applicants will also need to provide additional documentation to potential lenders. You'll need to show how you earn your income. You can do this by getting a letter from a certified public accountant, showing your business license or proof of business insurance. If you're a freelancer, a letter from a professional organization verifying your membership or a letter from a client will also suffice. Lenders also want to know as much as they can about the state of your business. You should provide them with bank records, profit-and-loss reports and cash-flow statements from the past two years. Hall said you may also want to include documents from your accounting software, such as QuickBooks. Lenders will also need to see your tax returns for the past two years as well as tax forms, relating to your business type — Schedule C for most LLCs and some sole proprietorships, Form 1065 for general partnerships and Form 1120 for C Corporations or S Corporations. You'll make a stronger case if you can show that your business is expected to grow, Hall said. So bring your business plans for the next few years. You can reach out to a self-employment or small business expert through NASE, the Small Business Administration or the Internal Revenue Service to ensure you have everything you need for your mortgage application. If you're self-employed or have unpredictable income, you'll have a better chance of being approved for a non-qualifying mortgage (non-QM), home loans that have have more flexible terms and accept non-traditional income sources. Examples of non-QM loans for self-employed borrowers include: Bank statement loan: A bank will consider your mortgage application based on your bank statements for the past two years rather than your income tax forms, such as a W-2. Profit-and-loss loans: A bank will consider your mortgage application based on your business' profit-and-loss statements rather than your income tax forms, such as a W-2. Investor cash flow loans: Also known as a debt service coverage ratio (DSCR) loan, this type of mortgage is specifically for real estate investors. A bank will consider your mortgage based on your rental analysis, rather than income or even employment verification. CrossCountry Mortgage offers all three, as well as several down payment assistance programs. Fixed-rate and adjustable-rate available, apply online for rates. Conventional loans, FHA loans, VA loans, USDA loans, Jumbo loans, manufactured home loans Apply online for terms 620 for conventional loans, 500 to 580 for some government-insured loans 3% New American Funding also provides non-QM loans to self-employed applicants. Borrowers can qualify using bank statements, profit and loss statements or tax returns. Apply online for rates. Conventional, FHA, USDA, VA, jumbo, refinancing, home equity loan, reverse mortgage 10- and 30-year fixed-rate terms and various adjustable-rate terms 620 0% for VA or USDA loans, 3% for conventional, 3.5% for FHA If you're worried a lender will take one look at your financials and reject your application, there are steps you can take to increase your chances. Local banks are much more likely to provide loans to local small business owners, Hall said. "The smaller community banks are more involved in the community," he said. "If you're operating a plumbing operation or a small restaurant, there's a reasonable chance that a banker has been to your restaurant. They're more familiar with the community." Lenders consider an applicant a safer bet if they make a larger down payment and have more savings in reserve. This shows lenders you have steady income and a lot of cash savings. The average down payment for first-time homebuyers is 9%. If you don't have a lot saved, consider down payment assistance programs. You can also make yourself a more attractive applicant by raising your credit score. Most lenders require a credit score of 620 for a conventional mortgage, but borrowers with a score of 760 or higher typically get the best rates. All three credit bureaus — Experian, Equifax and TransUnion — consider payment history, debt repayment and your credit utilization rate when determining your rate. By making on-time payments, paying off debts in full, catching errors on your credit report and keeping your credit utilization under 10%, you can significantly improve your credit score in a short amount of time. Separate your work and personal life — that goes for your finances, too. This makes it simpler for lenders to assess your business income and your personal finances. According to the Small Business Administration, you can do this by opening a business bank account, getting a Data Universal Numbering System number (which allows you to build credit for your business) and getting a business credit card. If all else fails, you may want to ask a loved one to cosign a loan with you. This means they promise to pay the lender if you fail to make the payment. Being a co-signer is risky and consequential. A cosigner is responsible for repayment but does not own a portion of the house. It also impacts the cosigner's credit score. Yes, but it will require additional paperwork, including financial documents, tax documents and future business plans. Typically, you should be able to show two years of steady work or self-employed income to be considered for a mortgage. Yes, getting a home loan as a self-employed person can be more difficult. However, there are banks that provide non-qualifying mortgages that don't require W2s. Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here. At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Associated Press
13-02-2025
- Business
- Associated Press
Key Business Tax Deadlines Approaching: ExpressExtension Helps Tax Professionals File Extensions with Ease
With March 17 tax deadlines approaching, ExpressExtension offers a secure IRS-authorized solution for filing business tax extensions with Forms 7004, 4868, 8868, and 8809. ROCK HILL, SC / ACCESS Newswire / February 13, 2025 / With the January 31 deadline for Forms 1099 and W-2 behind them, tax professionals now turn their attention to the next set of critical business tax deadlines. Among the most significant are Form 1120-S, Form 1065, 1042, and 1042-S, all due on March 17, 2025. For businesses and tax professionals who need more time to prepare returns, the IRS allows an extension request using Form 7004, postponing the filing deadline. However, this extension applies only to the return itself - any taxes owed must still be paid by the original deadline. ExpressExtension, an IRS-authorized e-file provider, simplifies the extension filing process, providing a secure and efficient solution for businesses and tax professionals. ExpressExtension - A Comprehensive Solution for Tax Extension Filing ExpressExtension supports the following tax extension forms for the 2024 tax year. Form 7004 This form is used to request a 6-month automatic extension for business tax returns, including Form 1120-S (S corporations) & Form 1065 (partnerships). With a deadline coming up for S corporations and partnerships on March 17, 2025, tax professionals can file Form 7004 to extend the filing deadline to September 15, 2025. Form 4868 Filing Form 4868 provides an automatic extension for individual income tax returns, including Form 1040 & 1040-NR. Individuals can extend their federal filing deadline from April 15 to October 15, giving them additional time to prepare and submit their returns. Form 8809 This form is used to request an extension for filing information returns, including Form 1099-series, W-2, 1042-S, and 5498. Filing 8809 grants an automatic 30-day extension for reporting payments made to foreign individuals and entities. Form 8868 Form 8868 grants an extension for tax-exempt organizations filing 990 series returns, including Form 990, 990-EZ, and 990-PF. Filing 8868 allows nonprofits and tax-exempt organizations more time to gather the required financial information before filing. PRO Features Tailored Exclusively for Tax Professionals ExpressExtension offers exclusive features designed specifically for tax professionals, making the extension filing process simpler and more efficient. Intuitive Dashboard for Seamless Management The ExpressExtension dashboard provides a centralized hub for tax professionals to efficiently manage extensions, track filing statuses, and access past filings. With real-time updates and a user-friendly interface, tax professionals can stay organized and ensure every extension request is processed accurately. Secure Bulk Upload Options ExpressExtension offers a quick and efficient way to add client business details manually or add all the required clients at once with the provided bulk upload templates. ExpressExtension offers the Express Guarantee for Forms 7004 and 4868. Under this guarantee, clients can receive a full refund of the payment if the IRS rejects these forms due to duplicate filing. If the extension forms are rejected for other reasons, tax pros can fix errors and retransmit the returns at no additional cost. Volume-Based Pricing Tax professionals can choose to pay per extension or purchase credits in advance at discounted volume-based rates. World-Class Customer Support ExpressExtension provides reliable customer support via phone, email, and live chat, ensuring tax professionals receive assistance whenever needed. AI Assistance At Every Step ExpressExtension's AI-powered chatbot provides instant answers to common questions, guiding tax professionals through the extension filing process. Visit and start e-filing Form 7004, 4868, 8868, & 8809 at an affordable price. About ExpressExtension ExpressExtension is the one-stop solution for IRS Tax Extensions. As an IRS-authorized, SOC 2 Certified e-file provider, ExpressExtension has been helping businesses, tax professionals, individuals, and non-profit organizations obtain IRS extensions for over a decade. Supported forms include Form 7004, 4868, 8868, and 8809. About SPAN Enterprises Headquartered in Rock Hill, South Carolina, SPAN has been developing industry-leading software tools for e-filing and business management tools for over a decade. The SPAN Enterprises Portfolio of products includes TaxBandits, Tax 990, ACAwise, ExpressExtension, 123PayStubs, and TruckLogics. [email protected].
