How to Get a Self-Employed Mortgage in Oklahoma

Searching for the best home loan in Oklahoma can feel like an overwhelming task — especially for a business owner. But, knowing how to get a mortgage as a business owner in Oklahoma will help you find the right loan officer for your needs and show up better prepared.

Our guide to getting a mortgage if you’re self-employed will walk you through what lenders look for, the documentation you need, ways to get the best self-employed mortgage in Oklahoma, and the current condition of the state’s housing market.

Recommended: Giniel Financial Group specializes in providing home loans to Oklahoma business owners.

Qualifying for a Mortgage When Self Employed

To be considered a self-employed borrower, you must own 25% or more of a business or receive a Form 1099 for contracted services instead of a W-2. Self-employed borrowers do face additional challenges in securing a home loan, but that shouldn’t stop you from pursuing purchasing the home of your dreams.

Lenders look at self-employed borrowers with a bit more scrutiny, but you can still show up prepared. Knowing what type of business you run, arriving with proper financial documentation, and maybe even securing a co-borrower could all help convince a lender to approve you for a home loan.

There are several types of loans available to the self-employed. These include conventional loans, FHA loans, and a variety of alternative loan types. To learn more, visit our Different Types of Home Loans for Business Owners guide.

Skip ahead to:

What Lenders Are Looking For
What Documents You’ll Need
Ways to Improve Your Chances
Finding the Best Mortgage Option for You

What Lenders Are Looking For

The criteria needed for a self-employed mortgage will vary from lender to lender, but most of it will remain the same. Expect to have your financial health put under a microscope and the viability of your business to be tested. Finding a mortgage will also put your experience as a business owner to the test.

When applying for a self-employed mortgage in Oklahoma, expect your lender to look for:

• Income stability: Expect to be asked for your two most recent tax returns so your lender can verify that your income can remain stable. This lets the lender know you’ll be able to make your monthly payments well into the future.
• Business operations: To make sure your business is financially sound, expect your lender to research how your business operates. This includes where your business is located, the demand for your products or services, and how likely you are to remain profitable.
• Business duration: You will need at least two years of income documentation for your business or self-employment. The longer you’ve been in business, the better your chances of getting approved.
• Personal income: Depending on how your business is structured, you may need to provide your personal tax returns as well as your business tax returns.

What Documents You’ll Need

As we mentioned above, you will need to provide your financial and tax history for at least the last two years. Knowing what documents to expect a lender to ask for will help you show up prepared.

Use this table to find which tax documents to show up with. Please note that for LLC owners, there are two options for tax return forms to bring. If your LLC has multiple members, you will need to bring Form 1065, if you are the sole member of your LLC you will need to bring your Schedule C form.

For S corps, depending on your business structure, you will need to bring either Form 1120S or Schedule K-1.

If your business is under two years old, or you don’t have at least two years of financial documentation, you can still get a mortgage. The bottom line is your business has to have been active for at least a full year, and your most recent two years of employment must be verified.

In this case, expect your lender to look very closely at your education and background to determine your financial track record.

Other Documentation to Provide

On top of tax forms, there’s other paperwork your underwriter will most likely want or need. Most likely, you will be asked for the following:

• Employment verification: Proof that you’re self-employed. This can include emails or letters from clients, a letter from your CPA, the state or business license you hold, proof of business insurance, or even your Doing Business As (DBA) name.
• Income documentation: Besides your tax forms, your lender might also want to view your bank statements to ensure you have the funds to cover a down payment.
• IRS transcripts: Your lender may ask you to sign Form 4506-T to acquire a transcript of your tax returns to verify all the provided information is correct.
• Profit and loss statements: These documents show lenders how much total profit you’ve made after your business expenses. 
• CPA letters: A letter of explanation from your CPA will verify your self-employment status and better shine a light on your income to your lender. 
• Documentation of business funds: If you’ve been reserving a portion of your business accounts for a down payment, you will need to provide proof of these funds. To do this, you will need to get a letter from your CPA confirming removal of these funds won’t harm your business and provide a copy of your business tax returns and bank statements.

Ways to Improve Your Chances

Even if you have the required material, it can still be difficult to secure a mortgage when you’re self-employed. Here are a few more tips and tricks you can utilize to better prepare for securing a home loan as a business owner.

• Optimize your debt-to-income (DTI) ratio: The easiest way to do this is to increase your income and reduce your debts. When using a mortgage calculator, aim to look for housing on the lower end of what it says you can afford to keep your DTI ratio stable while pursuing a home loan.
• Improve your credit: Don’t make any major purchases and stay on top of making regular payments to keep your credit score on track and appealing to potential lenders.
• Prepare for a large down payment: Saving for a higher down payment will make you more attractive to future lenders as there will be less risk in them investing in you since you have a lot of cash upfront.
• Have an emergency fund: Having proof of significant cash reserves gives lenders the peace of mind that you’ll still have something in the bank, even if your business hits hard times.
• Provide further documentation: Besides all the tax forms and CPA letters, you may need to be able to provide extra documentation. This can include a list of debts and monthly payments for your business, a list of assets, additional sources of income, and proof of current rent or mortgage payments.

For a deeper dive into what it takes to get a home loan as a small business owner, be sure to read our guide to mortgage basics for LLC owners.

Get the Best Mortgage in Oklahoma

Now that you know what documentation you’ll need to have, it’s time to start looking for the best home loan.

One of the most important factors in finding the right mortgage will be finding the best lender. You should ask your loan officer if they have experience underwriting self-employed income. You may also want to compare lender rates to better find someone who specializes in working with business owners with your budget.

Some lenders for self-employed mortgages will provide a variety of loans, ranging from conventional to more alternative types. We recommend using a lender with experience and confidence in the types of home loans a business owner might be interested in. This is why we recommend Giniel Financial Group for self-employed mortgages.

It’s also a good idea to do some research on Oklahoma’s housing market, which currently favors sellers vs. buyers. The statewide price of homes increased, as has the number of listed homes. With both home prices and availability up, much of the power rests with sellers in Oklahoma. 

Knowing how many houses are under construction, details about the renter population, and more will help you find the right time and place to buy your house in Oklahoma.

Understanding Alternative Self-Employed Mortgage Programs

If collecting all the documentation required for a traditional mortgage feels too overwhelming, there are other options. A non-qualified mortgage (non-QM), or alternative mortgage, might be right for you. 

Some alternative loan options are:

• FHA loan: This mortgage is insured by the Federal Housing Administration (FHA) and issued by an FHA-approved lender. These are designed for low-to-moderate-income borrowers and often come with lower down payment requirements. However, these do come with other costs, like mortgage insurance.
• Bank statement loan: Also known as alternative document loans, these allow you to apply for a loan without submitting tax returns. Instead, lenders will look at your last two years of bank statements to assess your business income. Interest rates tend to be higher for this type of loan.
• Joint mortgage: Finding a co-borrower who is a W-2 employee to share ownership of your home is another way to improve your chances of getting approved for a loan. Your co-borrower lets the lender know there will be steady, stable income in the chance your self-employment struggles.
• Enlist a co-signer: A parent or other trusted relative willing to co-sign your mortgage loan will help you gain loan approval. However, should you default on your loan, your co-signer will assume full responsibility.
• Asset depletion: If you happen to be a high-net-worth borrower, you have the option to convert your assets into qualifying income with an asset depletion loan.

Learn more about these types of loans by reading our What Are Non-QM Loans guide.

Understanding the Oklahoma Housing Market

Currently, the housing market in Oklahoma favors home sellers vs. home buyers. The statewide price of a home in Oklahoma increased by 10.3% since September 2021. In addition, the number of listed homes in the state rose by 7.6%. These increases give much of the power in this market to sellers, but thankfully, buyers have many options.

By the end of 2022, an estimated 100,000 people will move to Oklahoma. Even with an overall increase in the total population from 2021 to 2022, the number of inbound and outbound moves nearly match. Of all moves involving Oklahoma, 50.7% are inbound.

Of the 14,733 new housing units authorized for construction in Oklahoma, the vast majority — 90.4% (13,315) — are listed as single-family homes. According to data from the US Census Bureau’s most recent American Community Survey, 66.1% of all housing units in Oklahoma are owner-occupied, and the median home value is $142,400.

Renting is a reliable alternative in Oklahoma, accounting for 33.9% of the state’s housing. Of all housing units in Oklahoma, 515,827 are rental units, with the American Community Survey noting that the median monthly cost of rent with utilities is $818.

Those moving to Oklahoma may want to consider taking up residence in one of the state’s fastest-growing cities with more than 10,000 residents. The cities of Jenks, Newcastle, and Bixby have seen the most population growth since 2020. These three cities also have healthy job markets with many available positions and low percentages of unemployment.

Moving Forward

Now that you know what type of home loans are available to business owners and the current condition of Oklahoma’s housing market, it’s time to find the best lender for you. 

With the number of listed homes and the statewide price of housing up, Oklahoma’s housing market favors sellers. While more people plan to move into the state than out in the coming year, the difference is almost negligible, with slightly more than half of all moves occurring inbound. Be sure to show up prepared with the necessary documentation and know when to begin your housing search for your desired area.

Make sure you find the best mortgage lender for you by reading our Best Mortgage Lenders for LLC Owners guide. Learn more about mortgages and show up better prepared by reading our Mortgage Basics for LLC Owners article.

Recommended Lender: Giniel Financial

We think Giniel Financial Group is one of the best options for business owners looking to buy a home in Oklahoma. Click the button below to get your free quote today.

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