Getting a Home Loan When You Are Self-Employed

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Perhaps the biggest advantage of self-employment is being your own boss. But this could also mean working extra hard to earn more than the average salaried employee. That’s why when it comes to financing matters, you tend to question, are self-employed individuals even qualified to apply for a home loan (or any loan for that matter)?

The first step for self-employed loan applicants is to get their finances in order. This involves getting ready with their income tax return (ITR) – BIR Form no. 1701 (Annual Income Tax Return for Self-Employed Individual, Estates and Trusts), which is specifically for taxpayers who are engaged in trade and business, practicing their professions (doctors, lawyers, accountants, etc.) but not employed at specific companies, and those who have mixed income (engaged in trade/business or profession but who are also earning compensation income).

Once self-employed individuals have their audited financial statements for the last two (2) years with the latest ITR, bank statements, business registration documents, company profile, and government-issued ID ready, they can now apply for a home loan. 

Here’s a quick guide on the specific loan requirements if you’re self-employed.

  1. Business-owners

Individuals who run their own business must present  a copy of the business permit from the Department of Trade and Industry (DTI) or their Securities and Exchange Commission (SEC) registration, and financial statements of their business.

  1. Practicing Professionals

Professionals practicing their trade (doctors, lawyers, accountants, etc.) must include in their application information about their office or clinic address (including schedules and contact numbers) and bank statements for the last six months, while commission-based individuals must present vouchers or bank statements reflecting their commission income.

  1. Rental Property Owners

For rental property owners, they must submit a copy of the lease contracts or a copy of the property’s transfer certificate title and bank statements for the last six months.

The most important factor that will increase the chance of getting a home loan approved is for the applicant to prove that he or she is capable of repaying the loan. Therefore, banks will also be checking cash reserves. Having a sizeable down payment will help as well, as this will lower your monthly payment.

If you’re self-employed, let BDO Home Loan make the goal of owning a home a reality for you. Whether you’re purchasing your first home or upgrading your current one, you can avail of financing options with affordable rates and flexible payment terms. Application is easy and hassle-free!

Learn more about BDO Home Loan here

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