8 Ways Independent Traders Boost Mortgage Approval

Are you nervous about getting mortgage approval as an independent trader? When you’re not earning a consistent, stable paycheck, it’s harder to validate your reliability as a borrower. After all, lenders want to be confident that you can make monthly payments. 

Fortunately, it is possible to boost your mortgage approval chances. Read on to find out how!

1. Don’t Use All Available Credit

While you might have a lot of available credit at your disposal, don’t use it. Maintaining low credit utilization can help your credit score increase quickly. Ideally, you should keep usage under 30% of available credit to create a positive impression.

2. Pay Off Small Debts

A small personal loan repayment or lingering student loan debt can reflect poorly on you. Lenders like to see small monthly repayment obligations. Make a point of paying off more manageable debts so you can build a healthier financial picture.

3. Build Extra Savings

Lenders will appreciate knowing that you have plenty of money to cover mortgage payments. Build up your financial reserves so you can cover anything from emergencies to unintended maintenance needs. Lenders want to know you’ll be able to weather the storm of unpredictable income streams.

4. Be Diligent About Filing Taxes 

You’ll make a positive impression on lenders when you file your taxes early. You’ll also give yourself more cushion when it comes to assembling documents and painting an accurate picture of your income. 

5. Provide Trade Documentation

While you might not have a monthly paycheck, there are other ways to validate your income stream from trading. Just be sure to hang onto all bank account records and brokerage statements to show evidence of your earnings. Ultimately, non-qualified mortgage (non-QM) loans, or alternative income documentation loans, can provide a pathway to buying a home for individuals without W-2 and traditional documentation.

6. Keep Funds in Your Account

Keep your money in your bank account for at least two months to demonstrate that you earned it. If you’re making last-minute deposits into your bank account before applying for a loan, that can raise red flags. You want lenders to see your bank account as stable.

7. Be Consistent with Withdrawals

Erratic behavior with account withdrawals can also look suspicious. Aim to be regular with any withdrawals or deposits from your brokerage account. You’ll create more predictable patterns that will make lenders more comfortable offering you a mortgage.

8. Be Careful Writing Off Expenses

Don’t get carried away trying to write off too many expenses. While you can trim how much you owe in taxes, you’ll lower your income, which can hurt your status with lenders. Having a higher reported income will look better and help you secure a higher loan amount.

Present Yourself as a Reliable Borrower

Mortgage approval can be tricky when you’re not a traditional worker. As an independent trader, you’ll need to maintain clear documentation that shows your earning power. Be consistent with all bank deposits and withdrawals, and pay off small debts to improve your financial picture.

With a diligent approach, you can position yourself to earn mortgage approval.