Beginning the mortgage process can be a bit intimidating at first, especially for those who are self-employed or independent contractors. It’s a fact that each lender may have specific rules, or “overlays,” that may ask for different documents. However, the basic criteria are all the same, as all lenders are looking for the right mix of the following:

·  Credit history: Make timely payments, pay down debt, remain within your limit

·  Stable income and employment: Two years of employment history

·  Debt-to-income ratio: Avoid taking on any new debt and pay down existing debt

The key to having a smooth mortgage experience is to set up your expectations for the process. Expect lenders to request and review documents related to you and your business. Lenders want to ensure that you are being offered a loan that fits within your financial situation. Expect to provide the following documents to support your self-employed income:

Employment verification:

·  A copy of your business license

·  Proof of business insurance (if applicable)

·  A letter from a CPA verifying that you’ve been in business for at least two years

Income documentation:

·  Two years of federal income tax returns (personal and business)

·  Recent business bank statements

·  A year-to-date profit-and-loss statement that shows revenues, expenses and net income

·  An itemized list of unpaid accounts receivable

Each mortgage application is different and relies on the information that you can provide to create a portrait of your financial situation for the lender. If you are able to provide a strong story of your situation, a smoother experience can be had with the ultimate reward: financial freedom.