Insula Capital Group

How to Get a Mortgage When You’re Self-Employed

quaint houses in a residential area

There’s a long-held belief that it’s more challenging to get a mortgage when you’re self-employed. Unfortunately, when it comes to the conventional route, there is some truth to this.

Self-employed borrowers are often viewed as a more considerable risk compared to those in employment. Additionally, they also lack the tax documentation and other necessary proof of employment needed to get a mortgage.

For newer business owners, this can be particularly challenging because their credit scores aren’t always very high, and they are unable to make a large enough down payment. The alternative option for self-employed individuals who need to take out a mortgage is hard money loans. Keep reading to learn more.

Why are mortgage options difficult for self-employed mortgagors?

At one point, most major banks did offer mortgage options, such as Asset-Based Lending and Bank Statement Programs, for self-employed individuals. Now they’ve discontinued these options, and self-employed individuals have to present substantial documentation for approval.

Given the heavy documentation and paperwork required, approvals through the traditional route take at least 60 days. Business owners who aren’t as established can still end up getting denied for the loan as they often lack a thorough income history.

real estate mortgage calculation and loan concept

How does private mortgage lending work?

A hard money lender can make it easier for self-employed individuals to get access to a mortgage.

While conventional loans are based on the person’s credit history and credit score, private loans are asset-based. As a result, they are ideal if you’re self-employed and don’t have formal documentation to show that you’re earning.

Arguably, the best thing about hard money loans is that they are quick and efficient. In most cases, borrowers get approval with 72 hours of submitting their request. Additionally, the paperwork required isn’t extensive either.

Instead is spending countless hours putting together documents as proof of income, you can focus on your business because private money lenders don’t need extensive documentation.

How to get private money loans?

Private money lenders still require some documentation, but it’s more straightforward and less labor-intensive. You will need to show proof of identity, a note, a deed of trust, and a plan that summarizes how much money you need, how you’ll use the loan, what profit you expect over the years.

Want to get a mortgage through private lending? Reach out to the leading private lenders at Insula Capital Group.

We’re dedicated to helping business owners and real estate investors get access to low-cost capital at competitive rates nationwide. Enjoy seamless loan approvals with minimal documentation and no junk fees. Reach out to us today with information about your hard money real estate loan, and we’d be happy to help.