Zero Down Programs for the Self-Employed
For more and more people being an independent contractor is the way to go. Many engineers in the early 1990s became independent contractors. Many physicians work for several facilities and get paid as contractors. Some wage earners also work as independent contractors such as nurses, painters, teachers and carpenters. They enjoy the freedom of a more flexible schedule and a greater ability to control their retirement accounts.
Traditionally, lenders want to average an applicant's income over several years but the first 2 or 3 years as an indepent contractor includes a lot of expenses to set up the business that can show up as tax write-offs. So if lenders use past years taxes to base their decision, the independent contractor may appear to be making much less than the higher stable income they are currently earning.
If you are an independent contractor, YES you can buy a home with no down payment and no proof of your income. Having been through the growth period of your business, you know how important it is to have cash in the bank as "reserves". You also have a good idea of the actual income you are earning.
For those people who earn income seasonally, inconsistently through the year, or as tips there is a loan for you.
These loans are called "stated income" or sometimes "no doc" loans which simply means that you state on the application what your gross income is just like any other wage earner would. The difference is that the lender or bank doesn't ask you for proof. The lender or bank is taking extra risk and will charge a slightly higher rate for this program.
For this loan program you will need a letter from your CPA saying that you have been in business at least 2 years. You need fairly good credit to qualify for this loan and the better your credit the lower the interest rate. You also need the cash equivalent of at least 4 months of mortgage, taxes and insurance payments in the bank.
If you are an independent contractor and would like to learn more about how to buy a home with a zero down payment, call me for a free 1 hour consultation. Please keep in mind that although we try and keep this information current, that rates, programs and terms are subject to change without notice.