How to Get Your Mortgage Approved While Working as a Freelance Writer
By: Anya Willis, Founder of FITKIDS and Yoga Instructor
The Key to Being Approved for a Mortage as a Freelancer
The key to being approved for a mortgage as a self-employed individual is to provide the bank with ample evidence regarding your financial stability. If you’re a freelance writer or other freelancer who’s looking to secure a mortgage for a new home, here are some tips to help you find your footing and get the process started correctly.
Typical Lender Requirements
Lenders typically use set criteria when deciding whether to approve or reject a mortgage. By presenting yourself as an attractive candidate, you will increase the chances of being granted the mortgage you need.
Develop a High Credit Score
As reported by US News, for conventional mortgages you’ll require a minimum credit score of 620. However, your aim should be to increase it as high as possible to make your profile stronger.
Maintain a Strong Self-Employment Record
By providing a self-employment history depicting a regular and strong inflow of income, you’ll reduce the reservations a lender has towards your ability to repay. Plan to provide business financial records dating back two years or more. Incidentally, to maximize productivity and efficiency, you should also consider streamlining your freelance work by adding a dedicated office and some other renovations to your home!
Provide a Large Down Payment
While 20% is the minimum lenders expect, the larger the down payment, the less risk they need to undertake. Hence, they’ll be open to offering you better rates and repayment terms.
Gather All Necessary Documents
By having the necessary documents at your disposal, you’ll make it easier and faster for lenders to process your application. This can include:
- Tax returns for the past two years or more
- Business financial statements such as profit and loss statements, balance sheets, etc.
- Documents regarding business registration, company structure, and more
- Declaration of assets
Explore Your Options
If you cannot meet the above-mentioned requirements for a conventional mortgage, here are some other options to explore:
- FHA Loan: As reported by Investopedia, Federal Housing Administration (FHA) loans will accept down payments as low as 3.5% and have lenient credit score requirements. However, you’ll need to get mortgage insurance, and your property will need to be applicable for an FHA loan.
- Bank Statement Loan: These loans are granted solely based on your bank statements for the past 12-24 months. But, you’ll need to pay a larger down payment and higher interest rates.
Everyone dreams of owning their own home, but sometimes, the process requires a little extra planning when you are a freelancer. Now that you understand the key factors lenders will consider for your mortgage application, take the time to improve your finances, reduce debt, and gather all documents before starting the home buying process.
For more tips for Freelance Writers, check out “Starting a Movement: 5 Things we writers can do to move more than our fingers while we work”.
Anya Willis is a mother of three and has been a yoga instructor for the past 12 years. She understands that getting kids to be active is no easy feat. She created FitKids.info to help parents find fitness alternatives to keep their kids moving.
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