Business owners face a number of challenges when applying for their first mortgage. They lack the clear process of income verification that many employers provide, and they don’t have the same consistent income someone with a job does. Underwriting processes often penalize small business owners for that very reason with higher interest rates while other institutions simply say no to their business. Here are five tips for business owners applying for a first mortgage.
1. Disclose Everything
If you are an employee of a company and own a stake in it as an original founder, you need to disclose this when applying for a mortgage. You should know your ownership stake in the business. If you own a quarter or more of the company, you will need to file a corporate tax return as part of your mortgage income. The profits and losses of the company could affect your mortgage application, but failing to disclose this information (which lenders can easily find out) risks lenders tossing out the application.
