Making the big jump, finally, after my lease is up this summer and beginning the process of purchasing my first home. I know that even signing a lease for a new apartment while self-employed can be a little arduous as you can’t show guaranteed income. So I can only imagine how much more strenuous this process will be when it comes to buying a home and securing a mortgage.
Any of you out there in a similar boat? Or perhaps you were in a similar boat and have some nuggets of knowledge to share to help make this process as seamless AND painless as possible? I’d definitely appreciate it!
Hi Josh. I am learning about this process too…here’s what I know so far.
1. To qualify for a mortgage, we need at least two years’ worth of tax returns. Most of the lenders ask for three. This is to show *consistent* level of income.
2. As I’m sure you know, the “max loan we can qualify for” doesn’t necessarily equal “how much house we can afford.” I brought up the latter question in another thread in this forum, and Carla Dearing told me 2x (where x is income) is a good conservative number. She actually said “Depending on your other assets, conventional wisdom has been that it could be higher than that, like 2.5X but not more than 4X your income.” Given that I’m self-employed, though, I would rather err on the side of being conservative… So I’m planning to stick closer to 2x when the time comes.
I hope that helps some. Would love to hear what you’re learning about this process, too!