Buying a Home in Maine When You're Self-Employed

Travis Penny helps self-employed buyers get home loans in Maine, whether you file a Schedule C, own an S-corp, or work for yourself seasonally. As a general Fannie Mae and Freddie Mac guideline, most standard loans want two years of self-employment and use the income on your tax returns after write-offs. If your returns show too little, bank statement and other alternative documentation loans can work. Not everyone will qualify.

I started in 2004 and I'm still here. Maine runs on self-employed people: contractors, fishermen, guides, hairdressers, small shop owners. And the same story comes up every spring. Your business is doing fine, your accountant did a great job cutting your taxes, and now the lender says you don't make enough to buy a house.

How lenders read your income

On a standard loan, the lender averages the net income from your last two years of tax returns. The write-offs that saved you money in April count against you here. Depreciation and some one-time expenses can be added back, so a good loan officer reads the whole return, not just the bottom line.

Two years, or less?

As a general Fannie Mae and Freddie Mac guideline, two years self-employed is the normal bar, and lenders may vary. Some files work with less if you were in the same line of work as an employee before going out on your own. Flag this for me early. It's often the deciding question.

Seasonal income

If you earn most of your money in summer or during the fishing season, that's fine. Lenders look at the full year. What hurts is a big drop from one year to the next. Expect questions if year two is well below year one.

When the tax returns don't tell the real story

Bank statement loans qualify you on 12 or 24 months of business or personal deposits instead of tax returns. Bank statement programs often allow less than 20% down for strong files; not everyone will qualify.

What to have ready

• Two years of personal and business tax returns, all schedules
• A year-to-date profit and loss statement
• Two to three months of bank statements
• Your business license or proof the business is active

One more thing

If you're planning to buy next year, talk to me before your accountant files. You don't have to give up deductions, but you should know what they cost you on the mortgage side.

Who I am

Residential home loans in Maine and Florida. DSCR loans on investment and rental properties in 38 states.

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Travis Penny, NMLS 1649161 | Vision Mortgage, NMLS 1286953. Subject to credit approval, income, property and program guidelines. Not all applicants qualify. Programs and guidelines can change without notice. Equal Housing Opportunity.