How to Buy Real Estate as Self-Employed

December 10, 2021

Think you can’t get an investment property loan when you’re self-employed? Think again

We have no idea how or where or why it got started, but for some reason people have it in their heads that if you are self-employed then it is impossible to secure an investment property loan to buy real estate. Well that’s just a bunch of poppycock and gobblygook. (Sorry for the harsh language.) If you are asking yourself, “Can I get a mortgage to buy real estate if I am self-employed?”, the answer is a resounding yes. In fact, not only is it possible to buy real estate when you are self-employed, it’s actually pretty common.


Yup, it’s true. (Like, why would we even lie about something like that?) When looking into investment property loans, fix and flip loans, rental property loans, or even conventional loans when you are self-employed, it’s not really that much different than if you were working for a corporate employer. Money lenders still use the same general factors when determining investment loan approvals. The only real difference is what they are looking at and what you need to provide them. So, yeah, there may be a little more legwork involved on your side but, hey, you’re self-employed; doing more legwork is something you’re used to, right?

When shopping around for a dependable money lender (you know, like The Loan Guys), you’re gonna wanna be ready. You can’t just walk into any bank or money lender with hands out screaming, “Money, please!!!” You gotta come prepared. Here are some helpful tips if you are self-employed and are looking into a loan to buy real estate:

Establish a self-employment track record

You should have at least two years of self-employment history. The longer the better as this shows that your income is stable.

Provide documentation

Being ready to fully document your income through previous years’ tax returns, profit and loss statements, balance sheets and the like will increase your chances of qualifying for a real estate loan.

Pay off your consumer debt

The fewer monthly debt payments you have going into the mortgage process, the easier it will be for you to make your mortgage payments.

Max out your credit score

A higher credit score will make a borrower a more attractive candidate to get the loan in the first place and qualify for lower interest rates.

Offer a large down payment

A bank will see the borrower as less of a risk if they put a lot of cash into the purchase upfront.

Have significant cash reserves

In addition to a large down payment, having plenty of money in an emergency fund shows lenders that even if the business takes a nosedive, the borrower will be able to keep making monthly payments.

Now, just like dating, you want to put your best foot forward when it comes to getting an investment property loan. The idea is to present yourself like an attractive (financially speaking, of course) candidate to your money lender. The better you look on paper (again, financially), the more you improve your chances on getting a rental loan, conventional loan, a fix and flip loan, a rental property loan, or even a bridge loan. Here’s what you can do to improve your odds when you are self-employed:

*Maintain good records.

*Register and license your business.

*Pay yourself a W-2 wage rather than an owner’s draw.

*Lower your debt load.

*Reduce your tax deductions.

*Keep separate business and personal accounts.

*Consider making a larger down payment.

Of course, not all investment property loans are considered equal, so the key to getting a loan for buying real estate is to find the loan that fits YOU. This might mean skipping over applying for a conventional loan, which has a much more challenging approval process for those who are self-employed. Instead, consider…

Bank statement loans

Simply put, a bank statement loan is a loan where you prove your income to money lenders by showing them one or two years of regular deposits in your bank statement. It allows you to verify your income on a mortgage application using documented bank deposits instead of tax forms. A bank statement loan requires much less documentation. The borrower’s ability to repay is based on an analysis of the money going into and out of their bank statement each month over a period of time. Business bank account statements are used most often, but bank statement loans can also be made based on personal bank statements as well.

1099 loans

1099 earners can actually qualify for investment property loans via, you guessed it, a 1099 loan. By using 1099 earning statements in lieu of tax returns, underserved borrowers have an alternative loan solution that helps many self-employed 1099 earners invest in real estate property.

Instead of your tax return, typically one to two years of the most recent statements are required for a 1099 loan and the borrower must be employed with a single employer for two years. Money lenders also look at your credit history to see whether you have managed your debt well in the past.

Getting a mortgage loan to buy real estate when you’re self-employed may seem like a stretch, but it’s really not. Think about it this way: When you’re self-employed, you’re your own boss. You’re calling the shots. Applying for a property loan is no different. You’re just taking those entrepreneurial skills that made you a success (being organized, being pro-active, doing your due diligence, etc.) and applying it to the world of real estate property loans. Of course, even the self-employed need a helping hand, and that’s where The Loan Guys come in. If you ever have any questions or concerns our just want to learn more about buying real estate when you’re self-employed, the reliable (and super-friendly) folks at The Loan Guys have got you.

Leave us a reply


Your email address will not be published
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
8/4/23 9:50 pm


8/4/23 9:50 pm