Short answer? Yes, you absolutely can. But let’s break it down, especially for those of you hustling in New York City, whether you’re an Uber driver, a freelancer, an artist, or running your own business.
Buying a home in NYC is already a unique experience, throw in self-employment and it just means you’ll need to be a little more prepared. Here’s what you need to know:
What Mortgage Lenders Want to See
When you’re self-employed, you don’t have a W-2 paycheck like most traditional employees. But that doesn’t mean you’re out of the game. Lenders just need proof that your income is steady and reliable.
Here’s what they’ll typically look for:
Two Years of Tax Returns
This is the big one. Most lenders want to see two full years of personal and business tax returns to verify your income. They’ll average it out to get a sense of your yearly earnings.
Profit and Loss Statements
If you’re applying mid-year, you might be asked for a year-to-date P&L statement (don’t worry, your accountant can help you with this).
Bank Statements
These show your cash flow, business stability, and that you’re able to save money, all things lenders love to see.
Good Credit Score
Most lenders want to see a credit score of at least 620, but a score of 700+ will put you in a better position for approval and lower interest rates.
Down Payment
The standard is 20%, but there are loan programs that allow as little as 3-10% down.
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NYC-Specific Tip: Co-op vs. Condo for the Self-Employed
Coops dominate NYC’s housing market, but they can be a little trickier if you’re self-employed. Many coop boards want to see not just mortgage approval, but also several years of consistent income, liquid assets, and a solid debt-to-income ratio. Some even want to see 1-2 years of post-closing liquidity (i.e. reserves to show after the sale).
Condos tend to be more flexible. They’re often a better bet for self-employed buyers since you’re mainly dealing with the lender, not a board.
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How to Strengthen Your Application
If you’re self-employed and want to boost your chances:
– Work with a mortgage broker or lender familiar with self-employed buyers. They’ll know exactly what paperwork you need and how to present it.
– Minimize deductions for at least two years. We know the tax benefits of being self-employed, but too many write-offs can make your income look low on paper.
– Keep personal and business finances separate. Clean bank records go a long way.
– Have your CPA write a letter. A signed letter from your accountant confirming your business and income consistency can be a huge help.
