Keys & Credit
The no-fluff real estate and mortgage podcast that helps you make smarter moves with confidence.
Hosted by Realtor Bill Jerikovsky and Mortgage Lender Barb Miller, this show cuts through the jargon and industry hype to bring you honest, practical insights on buying, selling, and financing homes. Whether you're a first-time buyer, seasoned investor, or just trying to decode your credit score—Bill and Barb keep it real with bite-sized episodes.
💡 Real answers. 🙅♂️ No sales pitches. 🏡 Just straight talk on homes, loans, and everything in between.
New episodes drop weekly.
Subscribe and get the facts you actually need to own your next move
Barb Miller NMLS ID: 329237
Guaranteed Rate, Inc. dba Rate, NMLS #2611
Bill Jerikovsky RE/MAX RESULTS
This Podcast is edited and produced by Kody Hughes - Focal Point Media
FocalPointKody@gmail.com - 320-224-9828
Keys & Credit
Unlocking Mortgages for the Self-Employed
Struggling to get a mortgage while self-employed? You're not alone. The traditional mortgage process often leaves freelancers, contractors, and business owners feeling like homeownership is out of reach. But there's good news – alternative documentation options exist specifically for you.
In this eye-opening episode, we break down how self-employed borrowers can qualify for mortgages using bank statements instead of tax returns. Forget about the frustration of having your income dismissed because you've maximized write-offs. Learn how lenders can analyze 12 or 24 months of deposits to calculate your true income potential, accommodating seasonal fluctuations and business expenses without penalizing your homebuying dreams.
We explain the powerful but little-known portfolio loan programs that look at what you actually make rather than what your tax returns show. For 1099 contractors, discover how your income can be calculated with just a 10% reduction for expenses rather than the substantial write-offs that might appear on your returns. The best part? Once approved and funded, these mortgages function exactly like conventional loans – the alternative documentation is simply a smarter path to approval.
Most borrowers don't realize these options exist because many traditional lenders don't offer them or lack the expertise to properly implement them. Working with the right mortgage professional who understands self-employment can make all the difference between rejection and approval. Whether you've been self-employed for decades or just a few years, don't let conventional wisdom stop you from exploring unconventional solutions to homeownership.
Ready to move forward with your homebuying journey? Share this episode with other self-employed friends who might benefit, and leave us a review to help more entrepreneurs discover these game-changing mortgage strategies.
0:00 Welcome to Keys and Credit
0:23 Self-Employed Lending Options Explained
1:46 Bank Statements vs. Tax Returns
3:21 1099 Income Documentation Alternatives
5:54 Portfolio Programs for Contractors
8:00 Episode Wrap-Up
Welcome to Keys and Credit, your no-fluff, no-nonsense real estate and mortgage podcast. I'm Barb, your straight-talking lender.
Speaker 2:I am Bill the no-bullshit realtor.
Speaker 1:Whether you're a first-time buyer, seasoned investor or real estate curious, you're in the right place.
Speaker 2:You weren't even close to the microphone on that one.
Speaker 1:Well, let's get to it.
Speaker 2:So what are we going to talk about today? But okay, so I want to get into the self-employed, self-employed type of lending. I guess yeah, right um people that well perfect we have this program called rate.
Speaker 1:it's a rate portfolio that can help, you know, freelance people, self-employed, borrowers 1099 employees.
Speaker 2:Correct.
Speaker 1:Contractors. That doesn't fit into the cookie mold of W2 employees.
Speaker 2:So this program? I want to talk about this one, we want to talk about this one. So this program. When you get turned down for conventional loan FHA loan, va loan, usda loan, god knows whatever other loan because you don't have a conventional job, you are a contractor, your taxes aren't up to snuff or what they want to see for the past two years, because you're a contractor and you're writing stuff off, you write everything off six ways from Sunday. We all do. We write everything down to zero because we can. That's the joys of being a contractor. If you're a nine to5 employee, this does not pertain to you whatsoever because it won't work. But contractors, business owners, llcs, you name it, anything that isn't on a 9-to-5 status, they can use.
Speaker 1:Well, we have many different options. We can use 12-month or 24-month bank statements and look at your deposits going in for your business. Then we add those all up, divide it by 12 or 24, so that rotates though, right, yeah, so if so say so.
Speaker 1:Let's just say it's a summer, seasonal type um employment, you know. Let's just say landscaping, yep, okay. So in the summer obviously they're going to make more money than in winter in Minnesota, unless they're plowing, but there's still going to be lows, right, because we have no snow in September, october, right, and grass isn't really growing much, so that you want to use the 24?
Speaker 1:12. You want to use the 12? You can do well, depending upon how the deposits look, if you're going to do a 12-month or a 24-month bank statement program, Okay to do a 12-month or a 24-month bank statement program, okay?
Speaker 2:So if so, say they have. That's what I was trying to get at. So if the summer was awesome, the winter was great, or the winter was terrible, summer was awesome, you don't. We might do 24, then Do a 24, but you don't, you know, decline them because of the winter. Seasonal work Correct, Right, because you can see through that Now with that program, do you?
Speaker 1:Well, no, we're using bank statements but, you have to be self-employed for at least two years, right?
Speaker 2:So you have to file taxes, but you're not going to use those taxes for the pre-approval. You're going to use the money they're actually showing on your bank statements With this, instead of using your taxes instead of using the taxes that say you've made $7 last year. You can use the bank statements that show you actually made money.
Speaker 1:Yep, right, we don't. We look at your deposits. Another option within this program would be if you're a 1099, and we can use your 1099 either one year or two year, and then we take your 1099 income. So let's just say your 1099 either one year or two year, and then we take your 1099 income. So let's just say your 1099 income was 100 grand, we divide that by 12 and then we have to take 10 percent less than that and that's the income we can use for your expense ratio okay, all right, because you're going to write something off right, right, like eventually yep okay yep, so we have to take 10 percent less.
Speaker 1:so when you close, so say it's called it's alternative documentation to prove someone's income versus W-2s.
Speaker 2:Okay so when we go to close that say we get everything done, you use bank statements. Um, we get to the closing table. It's funded. It's considered a regular mortgage once it's done, oh yeah. It's just the initial pre-approval plot. Pre-approval process.
Speaker 1:It's just the initial pre-approval, pre-approval process. It's just what loan program you'll fit into. That's why we have many different loan types, so we can say yes more than we have to say no absolutely so.
Speaker 2:When someone because I've been self-employed for 22 years- okay and I just learned about this program last year. Yeah right, I you've known about it for forever, but we don't use the same loan programs for everybody all the time.
Speaker 1:Everyone's unique, so we got to figure out what program works best for you and what will work to help you achieve your goals.
Speaker 2:So what happened was someone came to me and said hey, you know what? I need to buy a house. My taxes aren't ready, or my taxes show that I don't make much money because I'm self employed. Okay, I've written everything off and I called barb. I said barb, is this possible? And she's like as a matter of fact, let me give you an education on what we do with self-employed and 1099 individuals. And that person was pre-approved right almost the same day. It's a little more complicated because you do have to give more documentation right and you have to prove it and it has to stay consistent. So say, um, you get pre-approved for this and three months down the line, the bank statements have to kind of stay the same. You got to keep making money right, right, you can't just say here it is and then three months later be broke right.
Speaker 1:Right, but it is an average over 12 months or 24 months, okay. Okay, if 24 months is going to Make it better, make it better, yeah, make it look better.
Speaker 2:But anyway, long story short, that person was able to get into his house and move forward with life the way he needed to, without all the crazy rigmarole of trying to submit taxes, explain write-offs, add back-in deductions I mean there's a thousand different ways you can add things back in when you're self-employed. But with this program you don't have to do any of that crap. No, you just do.
Speaker 1:It's easier.
Speaker 2:It's super simple.
Speaker 1:Yeah, less, stress.
Speaker 2:Okay, so does every lender have this option available to them? Yeah, it depends.
Speaker 1:I don't know what.
Speaker 2:I haven't heard of it from anyone else well, it's our rate. Portfolio program portfolio portfolio we use that as a name portfolio program, because our company is named rate and then our portfolio program. For fuck's sake. No way see what I have to deal with all the time. All the time I gotta deal with this.
Speaker 1:I'm just helping along.
Speaker 2:I'm just moving it along here, moving along. Um, so if somebody called the a different local lender and said, hey, I'm self-employed, I want to get pre-approved for a mortgage, most of them will say um, if they're self-employed like I, can't speak to what they have.
Speaker 1:Right but not likely.
Speaker 2:Most of the time it's no, if you go to a local credit union. If you go to, some of them are different. There's always an exception to the rule, but a lot of them don't have this option, right right, they don't have this option, right Right. They don't have the knowledge, the know-how, or they're not in the industry that we're in that deal strictly with this stuff to buy houses. They don't want to deal with it. They'll just say you know what? We're not going to approve you, you can't get approved. Call back in taxes, show you make some money.
Speaker 2:Whereas Barb hops in there and she's like no, show me your bank statements, show me you make money, we'll average it out. Guess what, bill, go find them a house, go shopping Off to the races. I mean this is the stuff that we like to drive home when it comes to a good team. Because stuff that I don't know, you know I mean stuff that you don't know, I'll know I know I mean stuff that you don't know, I'll know I mean it's. I just learned about this last year. I don't know how I didn't know about this, because everybody I know, is self-employed.
Speaker 1:Well, everybody right, you know there's a lot of self-employed.
Speaker 2:It's, it's just crazy. So just because you're self-employed does not mean you can't buy a house. You can't buy a house there's options. It just means that we have to get a little more creative, which is is what we do. And we do it on a daily basis, which we talked about last time, right, right?
Speaker 1:So is that all we have to talk about with self-employed? That's all we got to talk about.
Speaker 2:That's it. We're going to call this a short little snippet podcast of self-employed homeownership, self-employed pre-approval. You don't need a regular pre-approval. If you're self-employed, there's different options than just your tax returns.
Speaker 1:Right, right. Thanks for tuning in to Keys and Credit, where the only thing inflated isn't the market, it's your knowledge. I like that one. If you found this helpful, share it with a friend or leave us a review. It helps us more than you know. More than you know.