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Home Buyer's Recession Survival Guide - The Self-Employed Mortgage Maze

Updated on May 26, 2009

Even wealthy self-employed people such as lawyers and doctors have a staggering number of flaming hoops to jump through when it comes to securing a Mortgage. It seems that a Mortgage lender is more comfortable lending a quarter million dollars to an assembly line worker than to a prominent surgeon. When it comes time to make a lending decision, they would much prefer gazing at a tall stack of company paycheck stubs even if they are mere a fraction of the legitimate income of a self-employed professional.

The reason is that lenders love to see stable income. They have a pretty good assurance that the paycheck for $400 a week that has been coming in every Friday since the '80s is going to continue coming in, but they have no assurance whatsoever that the professional who earned half a million last year is going to earn half a dollar this year.

The simplest and most popular manner for the self-employed to qualify for a loan is through the "No Income Verification" or "Stated Income" Mortgage. Most of these types of loans are acquired through a Mortgage broker as the banks tend to not want to associate themselves with this market. Under one of these Mortgages, you have no need to prove any income whatsoever. But of course, there is always a catch. You require good credit. A sub-600 is not going to go far around here. Plus the down payment and/or equity has to sit at a bare minimum of 10% of the value of the property, and 20% is much better still.

If you can satisfy those requirements you may find that the rates on these loans is actually lower than on conventional Mortgages! And all this without having to go from bank to bank dragging a suitcase full of W-2s, 1099s, stubs, tax returns and audited financial statements just to still have them say NO!

Another form of self-employed loan is the "No Documentation Required" Mortgage. These loans usually carry a bit higher rate than the No Income Verification Mortgages and require a very high credit rating and a significant down payment in the property, usually 15% or higher. Why would anyone choose this over the No Income Verification loan? Simple. It's for people who want to finance their homes while maintaining a NOYDB policy. That stands for None Of Your Damn Business! No Documentation Required is just what it states on the title. You do not have to reveal anything at all about your financial situation. As long as your credit score is high enough and you can come up with equity or down payment to satisfy the requirements no one needs to know if you have $50 million in the bank of $50.

If you can come up with a minimum of 35% of equity or down payment, there is the "Don't Ask, Don't Tell" Mortgage option. The qualifications for this mortgage are... 35%! No credit score, no income verification, no nothing. They don't even care if you're an American citizen or resident. You come up with the cash, you get the loan. Simple and straightforward. For those who can afford it, anyway!

Read The Entire Survival Guide

Home Buyer's Recession Survival Guide - The Subprime Meltdown
Home Buyer's Recession Survival Guide - The Advantage Of Renting Over Buying
Home Buyer's Recession Survival Guide - Why Rent? Why Not?
Home Buyer's Recession Survival Guide - Five Common Mistakes House Buyers Make
Home Buyer's Recession Survival Guide - Get Your Home Sold Quickly & At Your Asking Price
Home Buyer's Recession Survival Guide - Improve Your Home's Value And Sell It For More!
Home Buyer's Recession Survival Guide - Learn The Value Of Curb Appeal
Home Buyer's Recession Survival Guide - Home Staging: Valid Selling Technique Or Fraud?
Home Buyer's Recession Survival Guide - Before You Go House Shopping
Home Buyer's Recession Survival Guide - The Home Condition Checklist
Home Buyer's Recession Survival Guide - Getting A Mortgage From Different Types Of Lenders
Home Buyer's Recession Survival Guide - What To Do After You're Turned Down
Home Buyer's Recession Survival Guide - New Initiatives To Help Get You Approved
Home Buyer's Recession Survival Guide - Isn't HUD An Old Paul Newman Movie?
Home Buyer's Recession Survival Guide - Jumbo Isn't As Huge As He Once Was
Home Buyer's Recession Survival Guide - FHA Q&A
Home Buyer's Recession Survival Guide - The FHA's Credit Requirements Vs. The Bank's
Home Buyer's Recession Survival Guide - Your Credit Score And Your Mortgage
Home Buyer's Recession Survival Guide - Credit Score Confusion
Home Buyer's Recession Survival Guide - Keeping That Credit Score Nice & High
Home Buyer's Recession Survival Guide - Minimize The Interest Payable
Home Buyer's Recession Survival Guide - What Is PMI & Why Do I Care?
Home Buyer's Recession Survival Guide - The LIBOR-COFI-COSI Alphabet Soup
Home Buyer's Recession Survival Guide - REO: Get Rich Quick Or Just Waste Time?
Home Buyer's Recession Survival Guide - Obtaining Flipping Money
Home Buyer's Recession Survival Guide - Consider The Additional Costs
Home Buyer's Recession Survival Guide - What Is Escrow?
Home Buyer's Recession Survival Guide - Tips To Avoid Foreclosure
Home Buyer's Recession Survival Guide - The Changing Value Of Your Mortgage Dollar
Home Buyer's Recession Survival Guide - How To Ride The Interest Rate Spikes
Home Buyer's Recession Survival Guide - Can't Get A Mortgage? What A PITI!
Home Buyer's Recession Survival Guide - Calculating Your Closing Costs
Home Buyer's Recession Survival Guide - Mortgage Broker or Mortgage Banker?
Home Buyer's Recession Survival Guide - The Magic Of A Down Payment
Home Buyer's Recession Survival Guide - A Refinance Checklist
Home Buyer's Recession Survival Guide - Refinancing With Bad Credit
Home Buyer's Recession Survival Guide - The Self-Employed Mortgage Maze
Home Buyer's Recession Survival Guide - VA Loans
Home Buyer's Recession Survival Guide - Offset & Reverse Mortgages
Home Buyer's Recession Survival Guide - The Reasons To Not Buy An Offshore Retirement House
Home Buyer's Recession Survival Guide - How To Pay Less Than $500 A Month
Home Buyer's Recession Survival Guide - Five Easy And Cheap Tips To Save Big $ On Energy

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    • ocbill profile image

      ocbill 

      9 years ago from hopefully somewhere peaceful and nice

      very true nowadays on no doc mortgages of 35% down or more. even the no income verification loans are 25% down too. It is a tough market overall.

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