Self Employed Borrower COVID-19 Underwriting Guidelines Relaxed by Fannie Mae and Freddie Mac on Conventional Loans
Strick COVID-19 rules rescinded for self-employed borrowers
For conventional borrowers, Fannie Mae and Freddie Mac will no longer require year-to-date profit and loss statements and bank statements showing revenue deposits for self-employed borrowers applying for a mortgage. This applied to anyone owning 25% or more of a business, or if income is generated through a 1099 as an independent contractor.
Fannie Mae and Freddie Mac put this rule into place in June of 2020 requiring self-employed borrowers to provide a year-to-date profit-and-loss statement reporting revenue, expenses, and net income as well as their most recent two or three months of bank statements. They believed this provided a good snapshot of the business’s financial health during the pandemic.
This was a negative impact on my business owners whose revenue was seasonal or nonlinear even though their businesses were stable. Since revenue deposits were not consistent, business revenue appeared unstable when applying this COVID-19 requirement. But, annually, their revenue was sufficient.
On February 2nd of 2022, Fannie Mae and Freddie Mac finally eased these self-employed borrower COVID-19 obstacles, creating opportunities for countless self-employed borrowers who were denied loans in the past.
Now more self-employed borrowers have the opportunity to take advantage of conventional loans low-interest rates, small down payments, and higher loan amounts. Click here to get started or call us today at 918-495-3773 to see how we can help you get approved as a self-employed borrower!Return