Say someone has a small business and is self-employed -- therefore, they don't have any proof of income in any way (assume such an example). This person, however, has 75% of the down-payment on a house. Will having 3/4ths the value of a house offset the need for proof of income?

I'd assume this would make sense. If you're just about able to buy the house, giving 75% down-payment would make your mortgage on a relatively low-valued property near zero -- something in my estimate of $17/mo., which virtually anyone can come up with -- even a homeless person.

My question is, will mortgage lenders still refuse the offer? Will they be more lenient?

Higher interest-rates are fine as long as my monthly payment falls beneath $100 with taxes.

  • Depends what country you’re in, which you’ve not told us.
    – Mike Scott
    Oct 6 '17 at 5:45
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    How did that someone come by the money. If it was by way of their self-employment how come they have no proof of its origin? Oct 6 '17 at 5:48
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    If the payment will be $17 a month, then a 30 year loan would be $6,120 in payments. If that is a 0% interest loan and represented 25% of the value of the house, then the house is $24,480 and the down payment is $18,360. If the interest rate is higher then the value of the house is even lower. Are you sure about the values? Please provide details on the numbers and the location. Oct 6 '17 at 10:16
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    @ShelfDancer One form of proof of income is looking at historical tax returns. If you paid taxes last year and included your business income, then the bank can use that to be assured that you did in fact earn income. Of course, if you are not reporting your business income on your tax returns, then you can't prove anything, and that's one of the many consequences of fraud! Oct 6 '17 at 13:21
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    You're overthinking things--3 years of income tax returns. Now, if you're cheating on your taxes.... Oct 7 '17 at 16:43

It's difficult to provide an exact answer as this will very much depend on the bank & the local regulatory scheme.

However as a business owner you should be able to provide incorporation docs, some proof of ownership of the company and last years' financial statements or tax returns, many banks would accept this as a proof of income for the purposes of granting credit.

In general in most jurisdictions I can think of, a high downpayment will not remove the need to verify income as the bank needs to feel comfortable that you have the ability to pay the remaining 25% (e.g. how do they know you're not a serially unemployed lottery winner) and if the downpayment is quite large they may want some assurance that you got the money legally (e.g. how do they make sure you're not a drug dealer). So probably regardless of how large a downpayment most banks would probably want some additional proofs of income however what proofs are needed may be more flexible than just a salary stub.

I suggest taking a look at what sort of documents you may have on hand that can serve to validate your revenue in some way and contacting a few banks directly to see what options they can provide and whether some custom-tailored arrangement can be made.

  • Yeah, that's not possible -- not in my situation. I don't have a structured business, but it is legal.
    – edwan wark
    Oct 6 '17 at 5:53
  • Just curious if money will talk enough to get me leniency in a mortgage with most of the property's value. Perhaps I should wait until I have closer to ~80% for a down payment? I could manage that in maybe a year.
    – edwan wark
    Oct 6 '17 at 5:54
  • Kind of like the bank's security in knowing they have a good hand of the value to offset risk.
    – edwan wark
    Oct 6 '17 at 5:56
  • It will depend on the bank but not likely in most developed economies will update my answer to explain why Oct 6 '17 at 6:00
  • If you're that close, save the rest of the total up and pray cash.
    – pojo-guy
    Nov 5 '17 at 12:58

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