How Do You Prove Income If You Are Self-Employed?
Self-employed potential homeowners may wonder exactly how they can prove income to gain approval for a home loan or mortgage application. Well, there are multiple ways to prove income if you are self-employed.
- Yearly tax returns
- Self-employed pay slips
- Profit and loss statements
- Bank statements
- Online payment statements
- Previous year’s financial statements, profit and loss statements, personal tax returns, business tax returns, and notices of assessment.
Keeping up-to-date records of finances and income can help a self-employed applicant gain approval for a home loan. Lenders will have different requirements for proof of income, some needing two years of tax returns and financial statements, and others only needing three weeks of pay slips to prove income. Lenders need proof of income to determine an applicant’s eligibility and risk status for capability of meeting monthly mortgage repayments.
Self-employed loans require varying types of proof of income, including:
- Income declaration: one page document, self-employed applicant will fill out estimated annual income or net profits before tax
- BAS statements: shows quarterly gross income, lenders may ask for up to four BAS statements to gain an idea of net income
- Business bank statements: lenders will generally ask to see three months of business bank statements to gain an idea of net income
- Accountant declaration: document prepared by a self-employed persons regular accountant verifying declared income
At Mortgage House, our professional lending specialists can answer any questions you may have about providing proof of income and assist in finding the best loan deal available. Reach out to us today to learn more!