A woman who is a self-employed borrower wears a white shirt while working from home.


Keith Robinson, Chief Strategy Officer of NextHome, pointed out in a post last week that there are about 30% fewer listings on the market this year, relative to last year. B/c there is plenty of pent up demand right now facing this decreased supply, home prices are remaining surprisingly stable.

Leonard Steinberg of Compass made a similar point in his blog today. America is underbuilt overall while demand continues to climb for a variety of reasons – so prices are not only holding up, we are back to “multiple bids” in some markets.


Fannie, Freddie and lenders everywhere are making things tougher for self-employed borrowers. This is on top of what has already happened with the Non-QM market (for bank statement and other non-traditional income loans) drying up.

B/c of the COVID-19 crisis, lenders now want to make sure that self-employed borrowers continue to operate both viable and profitable businesses.

Most self-employed borrowers now need:

  1. Unaudited Profit and Loss statements for all periods not covered by tax returns;
  2. TWO MONTHS of Bank Statements with deposits that corroborate the P&L Figures; or
  3. Audited Profit and Loss Statements in lieu of items #1 and #2.

Prior to the COVID-19 crisis, we had much more flexibility for self-employed borrowers, particularly if they had suffered downturns in recent months or even in the most recent year. There were ways to dance around such issues, but not anymore.

A friend of mine, for example, recently had a self-employed gym-owner apply for a loan. His tax returns looked good; his credit and cash positions were very strong; and he told my friend his gym was open and thriving again.

But, the gym’s website still said “closed” when my friend and his underwriters started to dig deeper – like lenders always do now.

The borrower’s gym has been closed now too for a few months, so he will have to reestablish his business and get his bank deposits back to normal before he can qualify again.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167

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