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FHA home loans do require the borrower to state all employment and gaps in that employment. When the borrower is going into business for themselves, it's a question of whether the income from that type of work is stable and reliable.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

Are FHA Loans Possible for the Self-Employed?

March 20, 2012

Many FHA loan applicants have frequently asked questions about the FHA loan approval process. One such question:

"Is it possible to get an FHA loan if you have a `gap' in employment due to starting your own business?"

FHA home loans do require the borrower to state all employment and gaps in that employment. When the borrower is going into business for themselves, it's a question of whether the income from that type of work is stable and reliable--and being able to prove it with the right documentation.

An FHA lender does not have to deny a loan simply based on alternative, non-traditional, or self-employment. But FHA loan approval rules for these types of employment are more strict to insure the loan is a good risk.

Self-employed FHA loan applicants must show their net income and list all business expenses that might offset that income--that means self employed borrowers need to be meticulous about their record keeping in order to successfully apply for an FHA mortgage.

In addition to good record keeping, consider having your taxes professionally prepared--the FHA will require these tax documents as well as your profit/loss record keeping and other vital documents that will provide proof of your legitimate business income and expenses.

To have the best possible chance for loan approval, self-employed FHA loan applicants should begin preparing for their new home purchase a lot earlier than those with traditional careers.

Be prepared to explain any lengthy gaps between contracts, freelance work, or slumps in the business, and be ready to answer detailed questions about the nature of your business and why any such gaps don't affect your ability to afford FHA mortgage payments should the loan be approved.

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