Starting a business is rewarding and challenging. Entrepreneurs put their heart and soul into growing the business and wear multiple hats in running their operations. Understanding the impact of being self employed on getting a mortgage is not a top priority for entrepreneurs. There are options that exist for self employed borrowers but not as many options as someone who is full time salaried employee. There are 3 factors in determining which mortgage option suits the business for self borrower:
- Length of time being self employed: Being self employed for more than 2 years provides more mortgage options.
- Amount of downpayment available for mortgage financing: Increased equity into the property reduces lenders' risk and provides security since the borrower has sweat equity invested into the property. There are mortgage products with as little as 10% downpayment for buying a home & 85% for refinancing.
- Credit score: Having a 680 credit score or higher with excellent credit track record is beneficial