Getting approved for a loan and purchasing a home can be a difficult ordeal for anyone, but this is especially true for people who are self-employed. Although it can seem impossible, preparation can make all the difference.

Can You Verify Your Income?

You will need some documentation to verify your income. Your last two income tax returns should be enough. Authorize your lender to view your income tax returns by completing an IRS 4506-T. Some lenders may require additional documents, too. Be prepared to provide your business license, written proof from a client who hired you, and a formal verification that your business exists.

Improve Your Credit

First, know your credit score. You don’t want any surprises from a reporting error. If you want to improve your score, pay off credit card balances in full or keep balances to a minimum. Don’t apply for credit on other purchases, like a car, during the application process for a home loan.

Limit Large Deposits

Depositing a large sum of money is ok if easily traceable to a legitimate source. If you have a larger deposit than usual, consider waiting until your loan is approved before adding it to your bank account. If this is not possible, be prepared to answer additional questions from your lender.

Keep Business and Personal Separate

Be organized. Make it as easy as possible for lenders to navigate your income and expenses. Some lenders may not consider certain debt applicable if paid through a business account.