Buying a Home While Self-Employed: What You Need to Know

Ron Contreras
Aug 7
2 min read

Being your own boss comes with freedom — but when it’s time to buy a home, it can also come with a few extra hoops to jump through. Lenders typically see self-employment as riskier, but that doesn’t mean homeownership is out of reach.

If you’re self-employed and thinking about buying a home, here’s what you need to know to set yourself up for success.

1. Be Ready to Show Solid Income History

Lenders want to see that your business is stable and profitable. Most will ask for:

Two years of personal and business tax returns
Year-to-date profit and loss statements
Bank statements (personal and business)

Tip: If your income fluctuates, lenders will usually average your income over the past two years. Big swings can raise red flags.

2. Keep Your Financials Clean and Clear

Make sure your business and personal finances are clearly separated:

Use separate bank accounts and credit cards
Keep clean, well-documented records
Avoid writing off so many expenses that your net income appears low

Remember: lenders base your approval on net income, not gross. So aggressive deductions can lower your buying power.

3. Know Your Debt-to-Income Ratio (DTI)

This ratio compares your monthly debts to your monthly income. Lenders typically want a DTI of 43% or lower — though some loan programs may allow higher.

Self-employed borrowers need to be especially mindful of this, since income can vary.

4. Boost Your Credit Score (If Needed)

A strong credit score can offset some of the risk lenders associate with self-employment. Aim for a score of at least 620 (higher for better rates), and:

Pay off debts
Avoid new credit lines
Check your report for errors

5. Consider a Larger Down Payment

Putting more money down can help strengthen your loan application. It lowers the lender’s risk and shows that you're financially stable, which is especially reassuring if your income varies month to month.

6. Work With a Lender Who Understands Self-Employment

Some lenders specialize in working with entrepreneurs, freelancers, and business owners. They may offer more flexibility and know how to properly assess your situation.

As your agent, I can also connect you with trusted lenders who work well with self-employed buyers.

Final Thoughts

Buying a home while self-employed takes a little more prep, but it’s absolutely doable. The key is to get organized early, know what lenders are looking for, and work with a team who understands your unique situation.

Ready to start the process or need help finding the right lender? I’d be happy to help guide you every step of the way.