Self-Employed Mortgage Access Act May Make Home Loans Easier for Business Owners in 2019


Dec 28, 2018 News Updates, Realtors

One of the most popular goals for any new year is to finally get into a new home. The best way to start is by figuring out what has prevented you from doing it so far. Obviously credit and job history are a major stumbling block for many, but there are plenty of people who have been employed for years and have great credit, and yet still struggle to qualify for a mortgage.


We’re referring specifically to many self-employed individuals.


We’ve written before about how getting into a home while self-employed is more challenging than for those in traditional careers. This status impacts many more people than you might realize; more than 30 percent of Americans are defined as “self-employed.” This includes more than just those with an office at home. It includes all small business owners, as well as the majority of farmers and those taking part in the “gig” economy—making a living by means of Etsy, Uber and similar methods.


Fortunately, senators on both sides of the aisle have recognized that the mortgage process is traditionally tilted against the self-employed, and have introduced legislation to do something about it: the Self-Employed Mortgage Access Act.


“An increasing number of Americans make their living through alternative work arrangements, like gig work or self-employment,” said Senator Mark Warner (D-VA). “Too many of these otherwise creditworthy individuals are being shut out of the mortgage market because they don’t have the same documentation of their income—pay stubs or a W-2—as someone who works nine-to-five. This bill will allow these workers to supply other forms of paperwork to verify their income while continuing to protect consumers from predatory lending.” Warner and Senator Mike Rounds (R-SD) are the sponsors for the bill. Both are members of the Senate Banking Committee.


The primary complaint the bill seeks to address is the inaccurate income estimates generated by non-W2 documentation for the self-employed. The bill will allow self-employed individuals to submit new documents for more accurate representation moving forward. Sole Proprietors (which includes Uber drivers, Etsy renters, and other “gig” employees) would be able to submit IRS Form 1040 Schedule C. Farmers would be able to submit IRS Form 1040 Schedule F, and those involved in partnerships could use IRS Form 1065 Schedule K-1.


None of this is on the books yet, but the bipartisan support is always a good sign. The bill has been read on the Senate floor and referred to the Committee on Banking, Housing and Urban Affairs.


If you’re a self-employed business owner, stay tuned for details; getting into a home is probably about to get a lot easier for you!


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