Self Employed Mortgage
by Owner of a Corporation
Ask Kate about mortgage guidelines for self-employed home buyers who are employees of their corporations: Kate, I have a question about self employed versus being an employee of a corporation that you own. In applying for a mortgage do I have to furnish business bank statements and tax returns?
I receive compensation with taxes taken out as do all the other employees. In applying for a loan wouldn't I just supply proof of my income and personal bank statements?
Kate Answers: Mortgage Guidelines for Self-Employed Borrowers with Corporations
Dear Corporation Owner,
A shocked employee of mine once asked me the same question as she was processing a mortgage application with tax returns from a business owner.
"Kate, My husband and I never disclosed during the mortgage process that we own our corporation. We only supplied W2's and pay stubs and called ourselves employees. Did we unknowingly commit fraud?"
I let her know typically anyone owning 25 percent or more of a business is considered a candidate for a self-employed mortgage. Just because a corporation is set up to pay the owner as an employee does not mean lenders see it that way!
In fact, personal and corporate tax returns, profit or loss statements, balance sheets, and business bank statements (as well as personal) will likely be required.
Tip: A little bit of effort on your part will show the loan originator that you respect their time. The fewer calls the rep has to make chasing down paperwork, the more time there is to be productive on your file. So make sure you include all pages of each set of tax returns. Then use sticky notes to label them by year.
Personal Mortgage Paperwork Planner
For a helpful list of documents needed to complete a mortgage application, use my free Mortgage Information Planner
. It saves you time, money and headache to get your ducks in a row before
you call a lender!
Tip: Because mortgage guidelines vary, you can also check with your loan originator to see what paperwork your specific mortgage program requires from corporation owners.
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