Here’s my monthly update on the outlook for current rates in general, but first — news about loans for self-employed home buyers. Skip to Current Rates here.

Loans for Self-Employed

Stated Income Loans

More new mortgage products have been hitting the markets in the past few years as we gain distance from the Great Recession of 2008. We now have more options for self-employed borrowers that we had been lacking for almost ten years. Before 2008, self-employed borrowers could qualify for mortgages by showing their gross income without looking at income tax write offs. These loans were called “Stated Income” loans and were designed with self-employed borrowers in mind.

When credit tightened after the Great Recession stated income loans that helped self-employed borrowers purchase real estate or refinance their existing mortgage(s) became scarce or disappeared entirely. When all mortgage products started requiring full income documentation for the borrower to qualify for a mortgage, many self-employed borrowers were no longer able to qualify because the amount of write offs they showed on their tax returns reduced their qualifying income to levels that were not approvable.

Amazingly, there are some stated income and no doc (no income used or stated) products coming back to the markets. These riskier products naturally come with much higher rates and more down payment and equity requirements.

Self-Employed Business Cash Flow

There are some stated income products returning to market but not at nearly the same level as before 2008. There is more emphasis currently on mortgage products that allow self-employed borrowers to show the cash flow in their businesses through bank deposits and by providing their business Profit and Loss statements. By providing 12 to 24 months bank statements, both business and personal, we can see a consistent pattern of income which can be used to help the borrower qualify for a mortgage without having to provide tax returns which reflect large write offs.

Rates

These products are still offered using 30-year fixed options with interest rates within 1% – 2% APR of conventional mortgage rates.

Down Payment

Down payment requirements can still be as low as 15% down when purchasing a primary residence.

Refinancing

For refinancing, there can be as little as 15% equity in the property. I have been working with several self-employed clients on these types of mortgages which can be a life saver for certain borrowers.

Closing Costs

As far as closing costs are concerned, we can do these deals with zero points and we can even do refinances with no points and no fees.

Loan Amounts