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How to Get a Home Loan in Washington State

Whether you’re buying your first house, thinking about a second mortgage, or refinancing, the loan process may seem difficult and complicated when you’re doing it on your own. And if you are ready to make one of the biggest financial commitments in your life – we want to give you the knowledge about getting a mortgage in Washington.

‘A good home buying experience is all about getting as much information as possible from start to the finish.’

An interesting fact is that the average American spends nearly 30 years building up mortgage debt, assuming they can find a mortgage at all. And if you’re a self-employed home buyer, it can be challenging to secure a loan and qualify for a mortgage at the same time. But no worries, it won’t be your story, you’re on the right source already, because LBC Mortgage is a local Washington State mortgage broker who will be able to make it happen for you.

So, whether you know something about mortgages or nothing at all – don’t worry. We are about to break down every step. And if you want to know what to expect, what documents are needed, what the mortgage rates are, or how to find a lender – keep reading!

What is a Self-Employed Home Buyer?

Lenders define ‘self-employed’ as a borrower with at least 25% ownership interest in a business or someone who is not a W-2 employee.

If you’re self-employed – you can apply for special programs such as Stated Income or Washington bank statement mortgage where you don’t need to show W-2 stubs, or if you want to buy an investment property you may apply for Washington DSCR mortgage loan program. And just like other applicants, you just should meet the same credit, debt, down payment, and income requirements.

The thing that might be difficult is proving your income. As a business owner, contractor, freelancer, or gig worker, proving your cash flow may need more documentation than for W-2 employees.

However, as long as you match loan guidelines and can show consistent cash flow, being self-employed shouldn’t stop you from buying or refinancing a property.

This informational page source will cover the ins and outs of buying a home as a self-employed home buyer in Washington State, from what you need to know to the best resources to help you along the way.

Get Pre-Approval Before Applying For a Mortgage

There’s a lot to know about buying a home, and one of the first things you’ll want to do is get pre-approved for a mortgage. This way, you know what you’re expected to qualify for and won’t have to rush to find a lender once you’ve decided to buy a house.

Self-employed borrowers don’t have to look for specialized lenders. Most mortgage companies will accept your application with self-employment income.

That means you have the freedom to shop around for the loan type you choose as well as look for a reasonable interest rate.

Keep in mind that almost every lender will base your income on your tax returns. As a result, your earnings may appear lower than they are.

Now let’s take a look at the lenders:

There are two types of mortgage lenders that can approve you for a loan: direct and indirect.

Direct lenders are more likely to approve self-employed borrowers, but, at the same time, indirect lenders will still fund most home loans. Therefore, it would be wise to check both types of lenders to find the finest fit for your needs.

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How Much Can a Self-Employed Home Buyer Borrow?

If you’re interested in purchasing a single-family detached home, you’re limited to a mortgage of up to $625,000. However, if you want to buy a condominium or a multi-family property, your mortgage is capped at $453,000.

Homebuyers who don’t fall under these self-employed lending limits can still qualify for a mortgage. Nevertheless, they’ll be charged a higher mortgage rate than the rates available to most other home buyers (more details below).

Eligibility Requirements

Most mortgage lenders require borrowers to have a minimum credit score of 620, but self-employed borrowers may be able to qualify for lower rates.

To qualify for a mortgage loan as a self-employed home buyer in Washington state, you should meet the following requirements:

  • Be 18 years old or older
  • Have a steady income for at least 12 months, certified by an employer, a government agency, or by your tax return
  • Meet home value requirements set by the National Association of Realtors

Getting Approval

Once you’ve narrowed down your lender options to two or three, it’s time to start applying. Start by visiting the lender’s website, where you can fill out an application.

Most lenders will ask for basic information like your name, address, social security number, and employment information. You’ll also need to include details about your income, assets, and debt, along with any mortgage goals you have for the next few years.

When you submit your application, be sure to include a copy of your credit report with a detailed financial overview. Credit reports are an important part of any mortgage application, so make sure you have one ready to go.

Next Steps For Home Buyers in Washington State

Now, after learning all mentioned above, are you ready to get started finding the best rate for your needs as a self-employed borrower? Or maybe do you still have questions and want to know more? Don’t hesitate to contact us today.

LBC Mortgage may hold the key to your homeownership goals!

Our Washington State mortgage broker with extensive experience in markets as well as our large network of lenders means we can help you find the best deals on home mortgages across Washington State. Contact us now!

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