The self-employed New Yorker's guide to getting a mortgage

You will need to have been self employed for two years and have a healthy balance between your business and personal bank accounts.


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Being your own boss can be both challenging and rewarding. It also means you have more work to do, and that extends to buying an apartment in New York City, where being self-employed means you are required to do some additional planning when it comes to getting a mortgage. 

You may be looking to take advantage of historically low mortgage rates and the current buyer's market, but if you are self-employed, you have a few requirements to check off before you can jump into the market: You typically need to have been working for yourself for at least two years and have a healthy balance among your business and personal bank accounts before you'll be able to get bank financing.

Here's what you'll need in order to get a mortgage:

A pre-approval letter

Ami Rosen, a mortgage banker with Wells Fargo, says his most important advice to anyone who is self-employed and wants to buy is to get an "iron-clad pre-approval letter," that indicates a bank has thoroughly reviewed your finances.

This is important even before you go apartment hunting, says Brittney Baldwin, vice president of National Cooperative Bank (and a Brick Underground sponsor) "as it may show you what other information may be required during the loan process."

Two years of self employment

To show a consistent income, lenders like NCB and Wells Fargo recommend having two full years of self-employment income. Rosen says with one year or less of self-employment, it's impossible to gauge what your income will look like. 

"If you are leaving your job at a hedge fund or medical practice to start out on your own we are not going to take into account any of your previous income unless we see a proven track record of making money on your own," he says.

Balanced personal and business accounts

An important part of getting a mortgage is being able to show consistent capital gains income. Self-employed New Yorkers are able to write off losses, carrying costs, and repairs against their business income, but if you write off too much it ends up reflecting a negative income, and that will impact your chances of getting a mortgage. 

"If you are showing negative income and we can’t add back certain portions of the income, you are not going to qualify for any mortgage, let alone a million-dollar mortgage, so it’s very important to be upfront before you make an offer," Rosen says.

You'll also need to consider how you use money from your business account. Rosen says if the down payment is coming out of a business account the lender is going to want to know whether that affects your business. "In those cases, we’ll want Certified Public Accountant (CPA) letters stating the use of business funds will not negatively impact the business," he says 

The right lender

There are so many different types of self-employment, it's worth finding someone within the bank you are using who is well versed in your type of self employment. "No two snowflakes are alike and you have to look at each person individually," says Rosen. 

A co-signatory option

You might want to consider having a co-signatory—in mortgage speak this is non-occupant co-borrower. Rosen says this option is often a route for young people who are starting out, don't have multiple years of employment behind them and have a parent who has a strong financial profile who can help.

The co-signatory "can use their income and assets to help qualify a borrower that might not otherwise get a loan," says Rosen. 

Exceptions for those with high net worth

If you are self-employed and are in the fortunate position of having lots of money in the bank, you may be able to get a mortgage even if your business shows losses. Rosen says a bank can calculate income by asset depletion.

"We can create an income figure from your asset portfolio. Ultra high net-worth who are self-employed can qualify, where others with lesser liquid assets might not be able to qualify," he says.