Eligibility Basics

Conventional loans are private‑sector mortgages that follow Fannie Mae or Freddie Mac guidelines. For self‑employed borrowers, the biggest hurdle is proving that the income you report on your tax returns is reliable and likely to continue.

Documentation Needed

Lenders will ask for:

  • Personal federal tax returns for the most recent two years, including all schedules (Schedule C for sole proprietors, Schedule E for rental income, etc.)
  • Profit‑and‑loss statements for the most recent 12‑month period, preferably prepared by a CPA
  • Bank statements showing cash reserves and the source of your down payment
  • Proof of any additional income (e.g., dividends, rental income)

If your business has seasonal fluctuations, a year‑over‑year comparison can help demonstrate stability.

Key Numbers to Watch

Conventional lenders typically require a credit score of at least 620, though a score of 700 or higher will secure better rates. The minimum down payment is usually 5% of the purchase price, but putting down 20% eliminates private mortgage insurance (PMI), which can add 0.3%–1.5% to your monthly payment.

The debt‑to‑income (DTI) ratio measures how much of your gross income goes toward debt payments. Most lenders cap DTI at 43%, but some may stretch to 50% if you have strong compensating factors such as a high credit score or substantial cash reserves.

Utah‑Specific Considerations

In Utah, most closings are handled by title companies rather than attorneys, which can streamline the paperwork process. The Utah Housing Corporation (UHC) offers a first‑time‑homebuyer program that provides down‑payment assistance and reduced mortgage‑insurance premiums, which can be especially helpful if you’re putting down less than 20%.

Next Steps

Start by gathering your tax returns, profit‑and‑loss statements, and bank statements. Meet with a mortgage professional who has experience with self‑employed borrowers to run a pre‑qualification scenario. Ask about any UHC assistance you may qualify for and compare offers from multiple lenders.

This is general information and not personalized advice.