Top 15 Home Buying Tips for Business Owners From the Pros

Luis Dominguez, Realtor Associate, Douglas Elliman Real Estate

Small business owners usually find it more challenging to get qualified for a home mortgage if they do not declare their income accurately. Banks usually want to see your tax documents and how much you claimed as income. If you’re planning to buy a home, you should start reporting your correct income years in advance so it’s easier to apply for a loan.

Kimberly Smith, Founder, AvenueWest Corporate Housing

As a small business owner, it can be very difficult to get financing because you have to prove your income. Meeting up with your banker personally and asking them for assistance can do wonders. There are banks that offer special programs to help business owners purchase primary residences.

Matt Bigach, Co-Founder, Nexus Homebuyers

If you’re a new business, consider taking a Fannie Mae loan option. Fannie Mae is a leading source of financing for mortgage lenders. Recently, Fannie Mae issued loan guidelines that drop a small business owner requirement from two years of tax returns down to one year in some cases. This allows newer businesses to qualify for mortgages without having a co-signer.

If you’re looking for a Fannie Mae loan that also allows renovations, check out our article on the FHA 203(k) loan.

Shane Lee, Data Analyst, RealtyHop

If you don’t have very good credit, you can put down a higher down payment to get a better interest rate on the mortgage. Also, a higher down payment means a lower loan amount. This allows you to either pay off the mortgage in a shorter term or enjoy a smaller monthly payment.

J.R. Duren, Personal Finance Expert, HighYa.com

If you’re concerned about coming up with enough money for a down payment, check if your state has bond programs that provide free down payment assistance. For instance, the down payment assistance provided in Florida goes as high as $15,000. There may be rules about how long you have to live in the home in order to get the assistance.

Constance Allen, Broker, Alternative Realty Corp. LLC

If your business allows you to operate from home, it’s best to move your current business office to a home office so you can save on your rent expense. If you consider this, you should find a house that has enough space. Assess how much space you need for the home office so you can plan the layout for your home accordingly.

If working from home is interesting to you, check out our article on how to start a home-based business.

Aaron Hendon, Real Estate Agent, Christine & Company

Most lenders require at least two years of tax returns, so it’s best to wait until you have been in business for at least two years. The longer you are in business, the higher your chance of getting approved for a mortgage.

Joyce Lee, VP of Sales and Marketing, Taylor Morrison Bay Area

As a small business owner, you may need to meet with your clients and partners from time to time. With this, it’s best to find a place that provides quick access to local employment hubs. Choose the location of your house wisely and make sure it’s strategically located in an area with convenient access to businesses, clients, and other important establishments that you often need to visit.

Paul Davis, CEO, Paul Davis Solutions, LLC

When purchasing a home, it’s important for business owners to find one that won’t require much of their time. Find a home that is located somewhere near your business. Also, it should be low-maintenance and won’t demand too much attention so you can focus on being with your family and building your business.

Blue Water Mortgage Staff Writer, Blue Water Mortgage Corporation

If you’re a business partner who owns a stake in a company, it’s important to know exactly the percentage of your ownership, especially when you plan to get a mortgage. According to Blue Water Mortgage, you’ll be considered self-employed if you own 25 percent or more in voting stock of a company. For this, you’ll be required to provide a business tax return, which will greatly impact your loan application.

Jessica Thiefels, Contributing Writer, Redfin

According to Redfin, there’s more than one way to buy a home. Make sure to do your research on the available loan options and explore those that may not be typically used. If you find it difficult to get qualified for one financing option, there are other options available for you to consider.

Doug Bend, Contributing Writer, Business Collective

Getting approved for a mortgage is not the final judgment that you need when buying a home. According to Business Collective, you should be prepared and set aside money for the closing costs. It’s best to talk to your lender and/or broker right away about the closing costs so you can anticipate how much you will need.

Commonwealth Bank Staff Writer, Commonwealth Bank of Australia

Your credit is very important when buying a home because most lenders want to see that you can manage your finances well. It’s essential that you can demonstrate the ability to meet your obligations when they are due. It’s suggested that you build your credit first and ensure you have a good score before you decide to buy a home.

Nicholas McGill, Contributing Writer, Inc.

If you don’t have a wealth team, Inc. suggests that you start building one. This includes an accountant, financial planner, broker, and real estate agent. These trusted advisors will help you with your home-buying process from start to finish. Their advice can be truly invaluable.

It’s important to keep documentation of both your business and personal financial transactions so you’ll have proof of all your income when you need to apply for a mortgage. Make sure to deposit all your business income into your business’s bank account. If you pay yourself a salary, it’s best to issue yourself a payslip and pay a separate tax for that.

For more information on how to separate and documents your business and personal expenses, check out our guides on the best business checking accounts and the best business savings accounts.