How to Get a Home Loan if you are Self-employed


Getting a home loan can be a tedious process especially if you are a business owner, a self-employed professional, or even a startup employee. Many lenders are skeptical of approving home loans of such individuals since they have unsteady incomes. But in the recent years, many banks and financial institutions have come up with home loan plans crafted specifically for the self-employed individuals, however, the interest rates may be slightly higher but that also varies from lender to lender. So if you are self-employed and planning to apply for a home loan, here are some key points that help you ensure an approval.

Good IT returns

Your lender is most likely to check your IT returns documents for the past two years in order to verify your income. Most financial institutions generally look into the past two years as they account for your average income of 24 months for loan validation. So, it’s fairly recommended that you should apply for a home loan when your business is doing really great.

Precise profit and loss statement for the current fiscal year

Managing your own accounts is one of the major drawbacks of being self-employed since it has to be accurate. And when you apply for a home loan, your lender wants nothing more than a detailed statement of your profit and loss for the current fiscal year.

Good home loan eligibility

When it comes to self-employed home loan applicants, lenders assess loan eligibility by taking into account the applicant’s net profit along with other considerations such as total income, the business use of their home and add depletion and depreciation.

Be a safe candidate

So, what does it take for a self-employed applicant to become a safe candidate for home loan approval? You should be able to put a high down payment on the purchase and must have a good amount of savings along with a high CIBIL score (750 and above). If you fulfill these criteria, you are a safe candidate from a lender’s perspective.

Other than these factors, many financial institutions also approve home loans for applicants who have a steady income along with previous records that suggest their good credit behavior and willingness to repay the loan. While you can get a home loan, you should keep in mind that the interest rates can be higher and some lenders may not offer a fixed rate of interest.