How to Buy a House as a Freelancer

How to Buy a House as a Freelancer

You may be here because you have successfully built your freelancing business, and now you want to make your living more secure by investing in a house. It may sound easy, but you may have to face many problems to get your dream house. One of the biggest problems is the freelance mortgage.

To buy a house as a freelancer and get the mortgage, you need to gather the following documents:

  • At least two years of tax returns.
  • Profit and loss statements.
  • Bank statements showing the money you have saved.

As you are a single owner of your business, you don’t need to get a surprise about this. Many individuals do not know how to deal with such situations, but you can relax as you are not one of those because we have got you covered.

This article has listed some valuable advice that you can follow and get a mortgage. By the end of this article, the troubling question about how to buy a house as a freelancer will be cleared from your mind.

1. You will need 2 years of tax returns

To get a mortgage loan from the mortgage lender or bank, you will need to have at least 2 years of tax returns. This will show how you have generated the income from your individual business.

It will also show that you are credible and will be able to afford the mortgage payment in the following years.

You can even opt for a cosigner. A consigner will help you obtain loan terms, and they can also help you increase the amount of principal that you can receive.

2. Ask your lender to average the yearly income

You have to be clear on the numbers that your lender will generate the mortgage in the pre-approval stage. Usually, mortgage brokers average the income that you have on the file (in this case, 2 years). But, sometimes they could use that number which is the lowest.

If there are particular reasons why your one tax return is lower than others, explain it to them. Your reasons could be any – sudden changes in the family, maternity leave, or any other major life-changing event. Just explain it.

3. Your savings could come in handy

If you have accumulated money you can give as a down-payment, this could be very beneficial. How? Making a heavy down-payment sign that banks and other lenders will notice will excuse you for your fluctuating income.

4. Keep your credit score in check

An excellent or even good credit score can be very beneficial for a freelancer while hunting for a loan. This will prove your financial management and stability with your lenders.

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It would help if you took away quickly to expand your credit score as much as you can before seeking a loan. You can build up by applying for a fresh credit card if you don’t have one, paying bills off on time, keep the balance low, etc.

5. A tax deduction can haunt you

Tax write-offs can be both a curse and a blessing for a freelancer. There are some advantages to writing off some business expenses like office supplies, monthly rent for the home office, software subscription, etc.

However, tax write-offs can affect your mortgage loan, as if there are more tax write-offs, the paper’s income will be shown less.

Final Words

Buying a new house as a freelancer could be an intimidating task, regardless of your job and earnings. You will have to show your achievements and records to the money lenders and banks to get a loan.

On the flip side, if you will see, few tips could seriously come in handy and make your overall house hunting less daunting. I hope you find these tips valuable and use them wisely to get your dream house. Good Luck!

Daniel Smith

Daniel Smith

Daniel Smith is an experienced economist and financial analyst from Utah. He has been in finance for nearly two decades, having worked as a senior analyst for Wells Fargo Bank for 19 years. After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management. At, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification. Read more on Daniel Smith's biography page. Contact Daniel:

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