Can Self-Employed Borrowers Qualify for an FHA Loan?

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While self-employed borrowers can be approved for Dallas FHA loans, they will have a harder time with the application process than most other types of borrowers. They don’t always have the steady income that the FHA and most lenders like to see in their borrowers. So they have to essentially prove that they are good candidates for the loan. They have to show some measure of stability and assuage worries that they won’t be able to pay back the loan in a timely manner.

Here are a few of the things that self-employed borrowers need to provide as they apply for an FHA loan.

Tax Returns

The FHA and the lender are going to want to see how much income you have and what your expenses are each year. While your tax returns won’t show them everything they need to now, they at least give them an idea of what kind of money you have coming in and where it is being spent. They will ask for the last two years of returns so they can see how consistent your income has been. While more years would show a larger picture, they might not be indicative of where you are now, so the lender probably isn’t going to want to look back any further than two years.

Business Plan

Lenders also want to see that you have a solid game plan when it comes to your business. They’re looking for lenders who aren’t just winging it and who know where their business is headed. They want to see what contingencies you have in place and how you are going to deal with income problems as they arise. It can help to have a professional look over your business plan and evaluate it for you, looking for ways it could be improved.

History of Payments

Have you been paying all your bills on time? Your creditors are going to look at your payment history and see how timely you were with your payments to credit card companies, suppliers, landlords and others who require regular payments. They know that the way you have dealt with those expenses in the past is going to be a good reflection of how you will deal with your lenders in the future. If you can’t show a consistent payment history, then you may have trouble getting the FHA loan.


Your taxes showed the lenders a snapshot of your earnings and expenses, but it didn’t give them the whole picture. They are going to want to see a detailed account of the expenses you have each month and each year. You’ll want to have that ready and be able to back it up with paperwork, if at all possible. As you can probably guess, the lenders will be looking to see if you can pay all your expenses with your income and still have plenty left over to pay the lender. They don’t want to be left out when payday comes, so they’ll be looking for borrowers who are able to pay in a timely manner and won’t be short every now and then. The more detailed the accounting of your expenses is the more at ease you will put the lenders.

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