The key to qualifying for a mortgage is having good credit, low debt, and predictable income. For people who are self-employed, proving that they have predictable  income may be difficult. I’ve consulted many clients with this challenge, and these are the issues they usually need to address:

1. Documenting income. A mortgage company wants to know how much money you actually earn. Make sure you document all income and expenses. Use accounting software to hire an accountant/bookkeeper to keep your records for you.
2. Separate personal and business expenses. Open a separate bank account for your business. Using the same bank account for both will make it difficult to separate business from personal income.
3. File taxes. Mortgage companies want to know what your annual income numbers are, and will request tax returns for the most recent two years.

If you’ve been self-employed for less than two years, your best option is to wait until you have at least two years of tax returns to be able to qualify for a mortgage as someone who is self-employed. You should also save for a larger downpayment, since most self-employed borrowers need to pay at least 10% towards the purchase of a home.