How to Play the Mortgage Game if You’re Self-Employed

A look at the extra hurdles facing self-employed borrowers.

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[Read: 10 Ways Your Home Can Pay You Money.]

For self-employed professionals working on a long-term project, Gloria Shulman, a mortgage broker and founder of the Beverly Hills, Calif.-based Centek Capital Group, suggests they ask to be brought on as a W-2 employee. "You could offer to sign a contract that exempts a long-term client from unemployment claims or other legal challenges when the project ends," she explains. "This strategy can put a self-employed professional on a payroll as a freelancer but provide the W-2 banks want on a mortgage application."

Shulman also recommends buyers downsize their price range, at least on a first home. "A net income of $50,000 is going to look exponentially more attractive if you are applying for a $220,000 loan versus one for $429,000," she says. "If you expect your net income to rise, this strategy will help you quickly build equity toward a larger home down the road instead of just paying rent every month."