If you are an entrepreneur or a small business owner, you probably know that there are a lot of advantages to this lifestyle – the freedom, the exciting challenges, the opportunities and the ability to make a living doing what you love.
However, you also know that being a small business owner can make
some things more challenging – such as apply for a mortgage for your
Many small business owners find it tough to get approved for a
mortgage, because their income can be erratic and the banks want to see
proof of consistent earnings over a significant period of time.
However, it is possible to qualify for a loan as a small business
owner. Here are some important things that you need to know about the
Ask Your Mortgage Lender What They Look For
If you ask your mortgage lender, they will probably offer you a
checklist for putting together all the information needed in your
mortgage package. It should have instructions on what specific documents
you need to include if you are self-employed.
Filling Out The Right Forms
When applying for the loan, you will need to fill out IRS Form
4506-T, which is a Request for Transcript of Tax Return. This is
basically a form that will allow the lender to look at your tax returns
from the IRS, which shows proof of your earnings.
You are not able to show lenders copies of your tax returns. They must get them directly from the IRS themselves.
Submitting A Profit And Loss Statement
It can also help to ask your accountant to prepare a Profit and Loss
Statement, which highlights the amount of money that you have brought in
compared to the expenses of setting up your business.
If you present several of these on a quarterly basis, it will prove
to the bank that your business is growing and is profitable enough to
cover your mortgage.
The important thing to remember is not to give up on the idea of
owning a home just because you are a small business owner. Ask your
accountant for help and take the time to submit the right proof of
earnings, so that you get the mortgage for your dream home.