The Realities of Getting a Mortgage as a Business Owner

Getting a mortgage as a business owner is not easy. Even though being your boss comes with so many perks. You call the shots, make your schedule, and build something that’s truly yours, and of course, those business assets are pretty great, too.

But buying a home is like hitting an invisible wall you didn’t even know existed, as you are getting a mortgage as a business owner.

Believe it or not, many business owners don’t realize how tricky it can be to secure a mortgage until they’re deep into the process. You’re excited, ready to find that dream home, and then, bam!

You’re being asked for endless documents and told your income isn’t “steady enough.” Suddenly, being self-employed feels more like a punishment than a perk. Just think about it: there’s a higher chance that your employees can quickly secure a mortgage, but not you! Awful, right?

You’re not alone if you’re a business owner trying to navigate this minefield. The process can feel unfair, but knowing what you’re up against (and how to handle it) can help smooth the path to homeownership.

Why Lenders Think Mortgage Loans For Business Owners Are Risky

Here’s the thing about lenders: they’re obsessed with stability. When someone applies for a mortgage, lenders want to see a reliable, steady paycheck.

Luckily, I worked at a job before I started my company and secured a mortgage. However, I heard from many of my small business customers that getting a mortgage as a business owner was a nightmare for them.

For employees, this is simple: a W-2 and a few pay stubs show precisely how much they make. But for business owners, though?

Well, that’s a different story. Your income might be fantastic, but it’s rarely predictable. One month might be a big win, and the next could be slower.

Generally speaking, lenders see that inconsistency and think, “What if they can’t make their payments during a rough patch?” In addition, lenders ask for more documentation from business owners.

Plus, tax returns, profit-and-loss statements, balance sheets, well, it’s all enough to make anyone’s head spin. And even after handing over all that paperwork, they still might treat your income as unreliable.

Tax Write-Offs Can Be a Blessing and a Curse

Okay, here’s another curveball for getting a mortgage as a business owner: it must be tax write-offs. Yes, you read that right! They’re one of the best parts of being self-employed since they’re the ones helping you save money when tax season rolls around.

But those write-offs can come back to haunt you when you’re applying for a mortgage.

That seriously throws people off by surprise, and honestly, you’re not to blame (it’s one of those things you learn when it’s too late). So, by deducting expenses to lower your taxable income, you’re essentially showing the IRS that you made less money.

Yes, it’s excellent for taxes but terrible for mortgages. Lenders look at that lower income and assume it’s all you’ve got to work with, even if your business is thriving.

But by all means, it’s frustrating, right? You’re just being smart about your finances, making you look less financially stable when deciding if you can buy a home.

Why Employees Have It Easier

It’s no secret that traditional employees have a simpler time securing a mortgage. They hand over a few pay stubs and a W-2, and, boom, they’re on their way to approval. Well, lenders love this because it’s predictable and manageable to verify.

But as a business owner, you’re expected to jump through many more hoops. But yeah, lenders want to see years of financial history, proof that your business is stable, and evidence that you’ll keep earning enough to make payments.

It’s not just about what you’ve earned; it’s about convincing them you’ll keep earning as you try getting a mortgage as a business owner.

But yeah, this double standard can feel exhausting. While employees are judged on their gross income, business owners are evaluated on their net income, what’s left after expenses and write-offs. It’s like being asked to prove yourself twice as much for the same outcome.

There’s the Emotional Toll of Getting a Mortgage as a Business Owner

Buying a home as a business owner isn’t just financially stressful; it’s pretty emotionally draining, too. You’ve worked hard to build your business and know you’re financially stable, yet the system is working against you. 

The constant requests for more documents, the questions about your income, and the skepticism from lenders can feel overwhelming. And when you’re already juggling the demands of running a business, the added stress of navigating the mortgage process can start to feel too much. It just makes you question why you’re not enough.

But it truly is like that for many business owners out there. Yes, you read that right—you’re not alone. Many business owners have faced these same frustrations and come out the other side with the keys to their dream homes.

It’s a challenging process, but not impossible (it only feels impossible).

Preparing for the Challenges to Get a Mortgage as a Business Owner

If you’re a business owner dreaming of homeownership, you need to prepare, yes, lots of preparation. So, lenders love documentation, so the more organized you are, the better.

Ideally, start by getting at least two years of tax returns in order, along with profit-and-loss statements that clearly show your business is stable. It’s also a good idea to separate your personal and business finances as much as possible; lenders want to see a clear picture of your income.

Ideally, you already have a business bank account because they want to see where the money is coming from and going.

But what else can you do? Well, you’ll need to work with a mortgage lender who specializes in working with business owners. Yes, some know the challenges for business owners and how it’s the furthest thing from being easy for them. Some lenders offer tailored loan options to meet specific borrower needs, which can make all the difference.

Now, you’ll need to look high and low for someone willing to fight (and help) tooth and nail and understand your situation, but when you find the right one, it’s worth it.

Why It’s Worth the Effort

Yes, buying a home as a business owner is more complicated than it should be. But that doesn’t mean it’s not worth it.

Overall, homeownership offers stability and security, something that’s especially valuable when running a business, which can feel unpredictable at times.

FAQs About Getting a Mortgage as a Business Owner