Mortgage application for the self-employed borrower can sometimes be tricky. Irregularity of year-to-year income stream, stability (or lack thereof) and tenure of business are factors contributing to potentially higher lending risk from the lender's perspective.

Generally, lenders look for satisfactory (ie sufficient income producing) self-employment track record for at least two years. Because cash flow from self-employment can include writeoffs and deductions of business expenses, some mortgage lenders permit the borrower's reported (documented) income by about 15% for mortgage application purposes. For some borrowers, this can be the difference between successfully obtaining a loan by meeting underwriting guidelines or being rejected.

The applicant must be able to provide the evidence of self-employment by way of business license, etc, and as always, good credit record really really helps.