Pre-Approval Checklist for Self-Employed Individuals

First-Time Homebuyer Yoshiko Oest and Russell Nomura February 3, 2025

If you’re self-employed and looking to buy a home, the pre-approval process comes with a few extra steps compared to W-2 employees. Since your income isn’t as straightforward as a regular paycheck, lenders require additional documentation to verify your earnings and financial stability. But with the right preparation, you’ll be on your way to securing a mortgage in no time!

Essential Documents for Pre-Approval

To get started, you’ll need the following:

Valid Photo ID – A government-issued driver’s license or passport.
Business and Personal Tax Returns (Last 2 Years) – Lenders want to see your full financial picture, including all income sources.
Year-to-Date Profit & Loss Statement (P&L) – Helps lenders assess your current business earnings.
Bank Statements (Last 2–3 Months) – Both personal and business accounts may be required.
Business License or Proof of Ownership – Verifies that your business is legitimate and active.
Authorization for a Credit Check – Your lender will review your credit score and history to determine your loan eligibility.

Additional Documents Your Lender May Request

Depending on your financial situation, you may also need to provide:

K-1 Forms – If you own shares in a partnership or S-corporation, these documents will be necessary.
Asset or Savings Documentation – Helps demonstrate financial stability and reserves for homeownership.
Debt Documentation – If you have business or personal loans, lenders will factor these into your debt-to-income (DTI) ratio.
Credit Issue Explanations – If you’ve had late payments or credit challenges, your lender may ask for a written explanation.

Why Preparation Matters

Being self-employed means you’ve worked hard to build something of your own, and homeownership is another big milestone. While the process may require more paperwork than for a traditional employee, being prepared can make all the difference in securing your dream home.

Next Steps

Start gathering these documents early to ensure a smooth pre-approval process.
Speak with a lender who understands self-employment income and mortgage options tailored for business owners.
Have questions? We’re happy to connect you with trusted professionals who can guide you through the process!

Buying a home as a self-employed individual is absolutely possible with the right preparation. Take this step with confidence, knowing you’re on your way to making homeownership a reality!