Self-Employed? Here's How Mortgage Lenders Verify Your Income
Self-employed buyers can qualify for a mortgage just like salaried employees, but the income verification process is more document-intensive, since there's no single employer or pay stub confirming a stable income figure. Understanding what lenders look for ahead of time can make the process considerably smoother. Why it's more complex than a pay stub A salaried employee's income is straightforward to verify — pay stubs and a W-2 tell most of the story. A self-employed borrower's income can fluctuate year to year, and the number reported on a tax return (often reduced by legitimate business deductions) doesn't always match what feels like "real" take-home income, which is part of why lenders dig deeper. What documentation is typically required Two years of personal tax returns , and often two years of business tax returns if the business is structured as a corporation or partnership. Profit and loss statements , sometimes requiring a CPA-prepared...