If you work for an employer and receive a weekly paycheck, the odds of your applying for a home loan and getting approved are good. On the other hand, if you are one of millions of people who are self-employed, the home loan process can become very complicated. Persons working for themselves may experience a large income and freedom, but a lender may be hesitant to approve such loans because of the uncertainty of future income.

If applying with the wrong type of lender, or choosing the wrong type of loan program, your mortgage application may be denied. Fortunately, there are ways for self-employed borrowers to get approved. The key is working with a good mortgage provider. This consists of a lender or broker who is knowledgeable in various mortgage programs.

Even though some mortgage lenders are willing to approve a loan request for a self-employed borrower, the problem typically lies in the borrower's ability to provide necessary documentation. For this matter, mortgage lenders prefer borrowers whose business has history. Thus, if the business has been operating for only six months, a lender may question the borrower's stability, regardless of how much money they earn from the business.

Furthermore, mortgage lenders must contend with self-employed borrowers overstating their income. To alleviate a long-term headache of lending money to an unqualified borrower, some lenders will only consider a self-employed applicant if they have a tax return for the past two years. The tax return must cover the current business of the borrower. To ensure the reliability of documents, the mortgage lender may request that documents be provided directly from the IRS.

Nonetheless, it is possible for self-employed persons to get approved for a home loan without a tax return for the previous two years. These loan programs include "No Income," "Stated Income," and "No Documentation" loans. These mortgages are only offered by specific lenders. Because of their complexity, some lenders choose to avoid these programs. All three loan programs entail the self-employed borrower getting approved for the loan without the lender verifying income.

To be eligible for such home loans, borrowers must have excellent credit. Each lender will establish the criteria. Furthermore, a higher than normal down payment may also be required before a loan is approved.