Being your own boss comes with a ton of freedom—but when it’s time to buy a home, things can feel anything but simple. Unlike W-2 employees, self-employed buyers have to clear a few extra hurdles. But don’t let that stop you—owning a home is absolutely within reach.
Here’s the deal: lenders are looking for consistency. You’ll typically need two years of tax returns that show steady or rising income. If your reported income is lower due to write-offs (which many self-employed folks do to lower taxes), it can actually hurt your loan eligibility. This surprises a lot of people.
Next, keep your finances clean. Lenders want to see separate business and personal accounts, minimal debt, and proof that you can cover a down payment and reserves. A solid credit score helps, too.
Pro tip: work with a lender who understands self-employment. They’ll know how to navigate things like 1099s, K-1s, and business expenses. And partner with a realtor (like me!) who can guide you through every step with strategy and confidence.
Self-employed? No problem. With the right prep and the right team, you can absolutely make homeownership happen.
🏡 How to Buy a Home When You’re Self-Employed: Step-by-Step
1. Get Your Finances Organized
- Separate business and personal accounts.
- Minimize debt.
- Save for a down payment and reserves (check with a lender how much you should save).
2. Gather Your Proof of Income
- 2 years of personal and business tax returns.
- Profit & loss statements (sometimes required).
- Bank statements to show cash flow.
- 1099s or K-1s depending on your setup.
3. Work on Your Credit Score
- Aim for 620 or higher (740+ opens the best loan options).
- Pay down credit cards and avoid new debts.
4. Choose the Right Lender
- Work with a mortgage broker or lender experienced with self-employed borrowers. They’ll help you choose a loan that fits your income structure. We work with a fantastic one, ask us for the referral!
5. Get Pre-Approved
- This shows sellers you’re serious and ready.
- Your lender will calculate how much you can afford based on documented income.
6. Find a Realtor You Trust
- (Hi, that’s me!) I’ll help you strategize, negotiate, and find the right home for your goals.
7. Go House Hunting
- With your pre-approval in hand, we can confidently shop for homes within your price range.
8. Make an Offer + Go Under Contract
- I’ll help you write a compelling offer and walk you through the negotiations.
9. Finalize Your Mortgage
- Submit final documents. The underwriter may ask for updated bank statements or clarifications.
10. Close and Celebrate!
- Once everything is cleared, we sign the paperwork and you get the keys to your new home!
The Paul Smith Team has expertly helped hundreds of clients successfully sell and/or buy their homes. Whether you need a Listing Specialist or Buyer’s Agent our team can help make the process smooth, predictable, and trusted every step of the way!
If you would like to receive more detailed information about buying and/or selling a home, give our team a call or send our team an email with your information with the Subject Line “Buying and/or Selling A Home” and we will be happy to help!
You can reach us at 843.606.0234 and/or home@thepaulsmithteam.com.