There is no doubt that mortgages are tougher to acquire for the self-employed, but they are not impossible. As one would expect there are certainly more hoops to jump through for those who make a living on their own. Gone are the days of stated income forms, having been replaced by the need to furnish tax returns. Loans for the self-employed are calculated from averaging the two most recent years of tax returns, which in today’s economy could show less income than usual for a person.
The bursting of the housing bubble was caused in large part by those borrowing money off of stated income. Many were borrowing more than they should of and biting off far more than they could realistically afford. Tighter lending restrictions have eliminated stated income for good reason. Therefore those who are self-employer will only qualify for what their latest income allows for and no more. That being said, loans are still attainable for those who are making money, borrowers simply need outstanding credit and a lot of documentation, as well as money in the bank.
While lending is expected to eventually loosen, whether or not stated income loans will return is still dubious. Going the private route will mean a higher price for any loan without guaranteed income. For the time being taking the straight and narrow route and coming to a lender armed with documentation is the surest way to borrowing success.