Self-Employed Find Getting Mortgage Difficult

Self-employed professionals, even those with good credit scores and big cash down payments, are having difficulty persuading lenders to give them mortgage loans.

Income for self employed doctors, lawyers, accountants, and real estate professionals are often understated because of large business-related tax deductions.

In the past, most self-employed people took out “stated-income loans,” which don’t require income documentation. But in the aftermath of the housing boom, these loans have a bad reputation. Dubbed “liar loans,” they were misused by some people to borrow more than they could afford.

Self-employed borrowers who also want jumbo loans are facing even greater challenges. Jumbo-loan originations declined 71 percent to $87 billion in the first nine months of 2008 from $303 billion during the same period last year, according to Inside Mortgage Finance.

Source: The Wall Street Journal, Nick Timiraos and Ruth Simon (12/01/2008)