Best Mortgage Lenders for Self Employed

For self-employed individuals seeking a mortgage, Angel Oak Mortgage Solutions is our top choice!

Buying a home can be one of the most exciting investments you’ll make during your lifetime. But as you know, buying a home is more than just analyzing neighborhoods and a particular front porch’s relaxation factor. However, financing your dream home can be difficult if you’re an independent contractor, own your own business, etc.

The mortgage industry isn’t built for those who are self-employed, but there are options for those who cannot gather the traditional array of documents.  

You may need to tap into a mortgage lender — and if you do, you’ll need to be pretty open about your job, your income and other assets. Self-employment can make all of this a tad more complicated. Benzinga has compiled expert advice so you’ll be able to hone in on the best mortgage lenders for your employment situation.

Quick Look: Best Mortgage Lenders for Self-Employed

• Best for Competitive Rates: Angel Oak Mortgage Solutions
• Best for Bank Statement Home Loans: North American Savings Bank
• Best for Flexible Requirements: CrossCountry Mortgage
• Best for Options: Rocket Mortgage (formerly Quicken Loans)
• Best for Quick Closing: New American Funding
• Best for Asset Depletion Mortgages: Truss Financial

Best Mortgage Lenders for Self Employed

Getting a mortgage without a traditional job and tax return is possible, and Benzinga rounded up a few lenders that can help. Remember, you are not out of options, and you should not choose the 1 lender you find you believe will help you. It’s better to shop around and hear all your options before making a final decision and paying the earnest money.

1. Best for Competitive Rates: Angel Oak Mortgage Solutions

Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio mortgage loans. Angel Oak Mortgage Solutions Bank Statement program is a loan option for eligible self-employed borrowers to purchase or refinance a home. This program allows personal or business bank statements to calculate income without requiring tax returns.

Angel Oak Mortgage Solutions provides loans ranging from $150,000 to $3 million and cater to mortgage applicants who have experienced foreclosure, short sale, bankruptcy, or deed-in-lieu by requiring two years of seasoning.

Their loans are available for purchase, cash-out, or rate-term refinance for primary residences, second homes, or investment properties. They accept applications for single-family homes, townhomes, and condos, even those that are non-warrantable.

Angel Oak Mortgage Solutions also offers flexible income options, including the submission of 12 or 24 months of business or personal bank statements and the possibility of using 1099 income. They also offer a unique 40-year fixed interest-only option to provide additional flexibility for borrowers.

2. Best for First Time Home Buyers: North American Savings Bank

When you want a bank statement-only loan, you can turn to North American Savings Bank because the firm only asks that you provide 12 months of consecutive bank statements to qualify when you’ve been in the same line of work for many years. While most other banks expect you to provide years and years of statements, NASB knows that you might have begun your self-employment timeline sooner rather than later, even though you’ve been working for quite some time.

You can obtain loans from around $200,000 to $1 million while putting 10% down on the loan itself. Put 10% down with mortgage insurance or pay 20% down to eliminate your PMI. A high 45% debt-to-income ratio makes it easier for mortgage applicants to qualify, and you are required to escrow your taxes and insurance (which is convenient at the end of the day.)

3. Best for Flexible Requirements: CrossCountry Mortgage

CrossCountry Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. CrossCountry Mortgage offers traditional loan terms, as well as more flexible home payment plans with its 40-year loan program.

It's also easier to get approved if you're self-employed. Tax returns are not required and you'll only need one year of self-employment income history and a minimum credit score of 580. CrossCountry Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts. 

CrossCountry Mortgage is licensed to lend in California, Colorado, Connecticut, DC, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, and Washington.

Rocket Mortgage® (formerly known as Quicken Loans) is one of the top-rated lenders by their customers.

Rocket Mortgage® offers many types of mortgages, including government-backed and adjustable-rate mortgages (ARMs). 

Rates are consistent with the market and Rocket Mortgage® helps you get approved even as a self-employed individual.

5. Best for Quick Closing:  New American Funding

New American Funding is a top choice for those looking for quick closing when it comes to mortgages. The company has a reputation for providing efficient and fast services to its customers, making the home buying process a smooth and seamless experience.

One of the main reasons why New American Funding is known for quick closing is their streamlined and efficient process. From pre-approval to closing, the company ensures that all necessary steps are taken in a timely manner, eliminating any unnecessary delays that can often occur with other mortgage lenders.

Additionally, New American Funding offers a variety of loan options to meet the needs of different borrowers. Whether you are a first-time homebuyer or a seasoned investor, the company has a wide range of loan programs to choose from, ensuring that you find the perfect fit for your financial situation.

6. Best for Asset Depletion Mortgages: Truss Financial 

When it comes to finding the best option for asset depletion mortgages, Truss Financial stands out as a top choice for borrowers looking to tap into their assets for a mortgage loan. Asset depletion mortgages are a type of loan that takes into account the borrower's assets, such as retirement accounts or investment portfolios when determining their eligibility for a loan.

Truss Financial offers competitive rates and terms for borrowers who are looking to leverage their assets for a mortgage. With Truss Financial, borrowers can access a wide range of mortgage products that are specifically tailored to meet their unique financial needs.

One of the key benefits of choosing Truss Financial for asset depletion mortgages is the personalized service and attention to detail that they provide to each borrower. The team at Truss Financial works closely with borrowers to understand their financial situation and goals and then helps them find the best mortgage product to meet their needs.

Why Are Self-Employed Mortgages on the Rise?

As movements like “quiet quitting” and The Great Resignation take hold of corporate America, it’s important to note that many workers are going into business for themselves. There are several segments of the economy where independent contractors can make very good money, but they aren’t paid like everyone else. Therefore, an independent contractor may not have the proper documentation for obtaining a mortgage.

Self-employed home loans, bank statement mortgages, no document mortgages, tax return home loans and the like offer access to homeownership that was previously not available. This is especially helpful for those who are applying on their own or married couples who are both working as independent contractors (or own their own businesses). It is crucial for mortgage applicants to have a good credit standing history and accurately report their gross income, net income, and net expenses.

Remember, a mortgage for the self-employed may also be helpful if one-half of a pair applying for the loan is self-employed, offering easier access to financing—or at the very least, pre-approval.

What to Look for in a Mortgage Lender

It’s not always a good idea to be picky when you’re looking for a mortgage — each mortgage application puts a hard inquiry on your credit. Do your homework ahead of time and you might be able to avoid unnecessary dents in your credit. 

Ask yourself several questions as you evaluate mortgage lenders:

1. What Interest Rates Do They Offer? 

Always compare various lenders’ interest rates, which tell you how much money you’ll owe the lender over time. You’ll also have to consider the terms of the loan — such as whether or not the rates are fixed or adjustable, and how many years you have to pay the mortgage — instead of just basing your decision on low rates. A fixed-rate means that the interest rate you were given when you took out the loan will never change for the life of the loan, whereas adjustable rates can change. 

2. What Will the Down Payment Be? 

You’ll want to know how much you’ll have to put down if your lender asks for a down payment. A down payment is a deposit you’ll have to put down when you buy a home. Don’t forget to consider closing costs — such as appraisal costs and property taxes — because you’ll need to include that in your savings as well.

Self-employed individuals are required to put down more money (roughly 20% total) than those who are not self-employed, especially if they don’t have tax returns or meet other requirements that lenders usually ask for.

3. What Terms Are Available?

There are terms on a mortgage that dictate how long you have to pay it back. These generally range from 5- to 30-year terms. Will you be able to adjust the mortgage payment terms if your financial picture changes at some point in the future?

For instance, will you be able to switch to a 30-year loan if you need to?

4. What Do I Need to Provide in Order to Get Approved? 

Most mortgage lenders require more or less the same documentation — including, but not limited to — your tax returns, bank statements and credit report. Ask plenty of questions about the extras you’ll need to provide because of your self-employed status.

Tips for Finding the Best Mortgage Lenders for Self-Employed

You’ll also have to find a lender that’s willing to work on you based on your unique employment and tax situation. Here are some tips for finding the best mortgage lenders for self-employed:

1. Look into Your DTI Ratio and Raise Your Credit Score

Your debt-to-income (DTI) ratio is the amount of debt you have in relation to your income. All you need to do is divide the minimum monthly payments of your overall debt by your monthly gross income — and shoot for a DTI of 50% or less. 

Check factors that can increase your credit score as much as you can. Your credit score is a number that tells lenders how reliable you are when you pay back loans or other debt. The higher your number, the better your chances are at getting a mortgage — and one with a low-interest rate.

Reduce as much debt as you can — credit card bills, student loans, etc.

2. Be Upfront

You will be asked about your job and your income, whether it’s through filling out a form or when talking on the phone. There is no use in stretching the truth or avoiding the question. Be honest about being self-employed, because you will likely have to prove what you say with a bank statement or tax return.

You may need to go through prequalification or pre-approval processes — prequalification offers less stringent checks on your income and other assets and pre-approval require a more in-depth check on income and other documents.

3. Get Your Documents in Order

Gather the right documents to streamline the process and demonstrate to your loan officer and your prospective real estate agent that you’re ready to get the process started. A few tips for the self-employed, include:

• Try to use an invoicing system to gather clear proof of how you were paid, why and by whom
• Break down your invoices by month
• Create a spreadsheet where you can list all invoices in one place (while holding back the supporting documentation above)
• Make certain that your accountant attaches supporting documentation to your tax returns

4. Prove at Least 2 Years on the Job

Your mortgage lender will look to see if you can prove steady income from the same job for at least 2 years. This can mean having your own company or client(s) that have consistently paid you during this time.

Find the Best Lender for You

Many mortgage lenders rely on the traditional process for lending money to homebuyers — asking applicants for documents and numbers that self-employed you may not have. There are a lot of lenders that can offer you other ways to take out a mortgage loan. Follow these tips and do your research so you find the right lender that’s willing to work with your personal situation. 

Frequently Asked Questions