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Self Employed 101

September 3rd, 2020 9:38 AM by Sam Kader

It's nice to be your own boss and determine your own destiny. However, there may be some disadvantages to generating your own income when it comes to applying for a home loan.

Here's what lenders are looking for approval:

  1. Due to COVID-19, effective 6/11/20 -  self-employed borrowers are required to provide Year-To-Date Profit and Loss.
  2. Enough Net Income shown on Tax Returns to qualify for the last 2 years obtain directly from the IRS - Form 4506-T (see special program below).
  3. 2 years of self-employment history proven with regular income stream.  Former Fed chairman Ben Bernanke was denied refinancing in September 2014 because he couldn't proved that he has been receiving self-employment income since he retired from the Federal Reserve in January 2014.
  4. If income decline by less than 20% from prior year, lender may qualify based on the higher income and a year-to-date profit and loss statement from an accountant.
  5. A copy of business license, or website address or letter from an accountant or CPA stating the business has been existed for at least 2 years.
  6. 2 years self-employment requirement may be waived (depending on lenders) if prior W2 employment  is in the same field. Profitable current Year-To-Date profit and loss statement may also be used if self-employment period is less than 2 years.
  7. Business debts that are paid for personally will be counted against your Debt-To-Income ratio.

Self-employed people or retirees with substantial current assets or retirement accounts may use those assets for income qualification. Do consult with us first.




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Pacific Coast Financial, LLC

MLO#130505 Lic# MB 78982

2150 N. 107th Street Suite 170
Seattle, WA 98133