Self Employed Mortgage First Time Buyer
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Adam Nunn
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Jon Porter
Self-employed first time buyers are assessed on the same criteria as anyone else. The difference is how income is evidenced: lenders use your filed accounts or tax calculations rather than payslips.
Self Employed Mortgage First Time Buyer (Part 1)
Adam Nunn and Jon Porter are here to explain how the mortgage process works if you are a self-employed First Time Buyer. Episode one of two, recorded in June 2025.
Can you get a mortgage if you are self-employed and a First Time Buyer?
You can – there are no restrictions on being a First Time Buyer and self-employed.
How does getting a mortgage as a self-employed First Time Buyer work? Is it difficult to do this?
No, being a First Time Buyer does not add any additional complications to getting a mortgage if you’re self-employed.
The process might feel overwhelming anyway, for a First Time Buyer, because getting a mortgage is unknown territory. There’s lots to learn when you’re buying a house.
The only difference for the self-employed is how the lender will look at your income. Getting advice from a mortgage broker is paramount – we guide you throughout the whole process.
How many years do you have to be self-employed to get a mortgage as a First Time Buyer?
A few lenders out there will consider you with just one year’s financial accounts or a year’s submitted tax return. But of course, the more years you’ve been trading, the better – there will be more options available to you. One year is the bare minimum, but ideally you’ll have two years or more.
What types of mortgages are available for First Time Buyers who are self-employed? Any differences here?
No, generally there’s no difference for a self-employed First Time Buyer. You can go for shared ownership, Joint Borrower Sole Proprietor, zero deposit mortgages, enhanced affordability and even Buy to Let mortgages for property investment.
These are just some of the types of mortgage that are available. However, each lender has different criteria, and the key thing is how your income is assessed by each one and how much they will lend you. Some lenders are more favourable to the self-employed than others.
How much deposit will I need for a mortgage if I’m a First Time Buyer and self-employed?
Again, it doesn’t matter whether or not you’re self-employed. Generally, the minimum deposit you need for a house to live in is 5%. Of course, the bigger the deposit, the better the interest rate, and potentially the more options you might qualify for.
A big thing over the last year or two has been the introduction of mortgages that don’t require any deposit – or less than 5%. A few lenders are now doing zero deposit mortgages. Another lender has a 1% deposit mortgage and one is offering a 3% deposit mortgage.
Deposit requirements have become a little bit more relaxed, although there will be other criteria to get that mortgage [Information correct at the time of recording in June 2025].
How much can I borrow for a mortgage if I’m self-employed and a First Time Buyer?
It’s mainly about your income and affordability, and there’s an assessment we go through on that. Most lenders have a maximum income multiple to calculate the mortgage amount – an example is 4.5 times household income.
Others can be a little bit more reasonable and go up to five times, especially for First Time Buyers. It’s about whether you meet the criteria for five times your income, based on your deposit and credit commitments.
How is a mortgage calculated for a self-employed First Time Buyer in the UK?
A lender will have a maximum income multiple they consider lending. There will also be criteria around how they assess self-employed income.
Once they’ve assessed that income, they look at whether you’ve got dependents, financial commitments and what your credit history is like. The length of the mortgage term is also a factor.
If you’re an older borrower, term restrictions could impact how much you can borrow. Your credit history could determine what type of lender is available to you. If you are with a non-mainstream lender that specialises in bad credit, for example, interest rates might be higher.
The interest rate can also play a factor in how much you can afford, based on their assessment.
What documents do I need to apply for a self-employed First Time Buyer mortgage? How do I prove my income?
Obviously the standard documents are required – ID, proof of address and three months’ bank statements. Credit reports are paramount, so we’ll check what the lender’s going to see on your credit file.
Evidence of deposit is another requirement. For the self-employed, we need documents to demonstrate your income, whether you’re a sole trader, partnership, limited company or a contractor.
The majority of the lenders work from your tax calculations, also known historically as your SA302s. This is an HMRC official document that confirms your income. There’s then the tax year overview, which proves what you’ve actually paid in that tax year.
With limited companies and shareholders, we also need the company’s financial accounts over the last two years.
Business bank accounts are key, as well. Lenders want to know that the conduct of the business is at the same level – because accounts can be up to 18 months old in some cases.
Lenders just want to see the same level of income going through the business currently.
It’s a bit different if you’re a self-employed contractor. Whether you’re in construction, IT or you’re a doctor, lenders may assess you based on your day rate or your contract. The history of that contract is important in how the income is assessed, as well.
How do lenders calculate my income as a self-employed First Time Buyer?
For sole traders and partnerships, they use the profit from your self-employment, or your share of profit. That’s evidenced in the tax computation or SA302.
For limited companies, they’re looking at salary and dividends or salary and net profit. Some lenders even accept salary and net profit before corporation tax. That can, of course, potentially enhance what you can borrow.
Once they’ve established what income they’re looking at, they look at trading history. For example, if you’ve got two years’ trading history where year one generated £25,000, but in year two that increased to £50,000, most lenders will take an average of those – giving an income of £37,500.
Of course, the difference between an income of £37,500 and £50,000 will be quite significant, depending on your borrowing requirements. Some lenders will consider using that latest year’s figure to allow you to borrow more.
On the other hand, if you earned £50,000 in the first year and only £25,000 in the second, the vast majority of lenders will only use the latest year’s figure. They will also want to know why it has reduced.
The longer the trading history, the better, because there might be valid reasons for that decline. Perhaps in the latest year you took maternity leave, but you can demonstrate from bank statements or your accountant that since you’ve returned to work, your income’s gone back up to £50,000.
How can I improve my chances of getting a mortgage as someone who is self-employed and a First Time Buyer?
An important factor is having an accountant – that can be invaluable, particularly when there are significant changes year-on-year in your income.
An accountant can provide references to verify growth or sustainability of the business and your income. It’s particularly important if there has been a drop of income – or if it’s increased.
For a limited company, it’s important for you as the director to have an understanding of salary and dividends. The level of the company’s net profits needs to be sufficient to enable the dividends received throughout the period.
How do I apply for a mortgage as a self-employed First Time Buyer?
The best option is definitely to speak with a mortgage broker. We will look at your income and your circumstances holistically to find a suitable solution. If you go direct to a bank, they’re only going to tell you what they can do – and if you don’t fit that mould, they won’t lend.
Additionally, if you’ve not already set up adequate insurances for yourself or your business, we will help you do that. We help you consider what would happen if you can’t work – as that key person, if you’re ill or injured your income might be impacted. Adequate insurance is key there.
Similarly, if you were to pass away, how would that affect your business or partner? We can help with that side as well.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.
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Meet the Author
Adam Nunn
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Jon Porter
Self Employed Mortgage First Time Buyer (Part 2)
We continue the conversation on mortgages for self-employed First Time Buyers with Adam Nunn and Jon Porter.
Is there any flexibility in the repayment terms for self-employed First Time Buyers?
Each lender has their own policy for the length of the mortgage term, the maximum age at the end of term and whether you take a repayment or interest-only mortgage.Most lenders will now consider up to a 40 year term, which is a long time, but that’s where we are with affordability and the cost of living. People need longer terms to pay the mortgage and bills.
A key thing here could be your age. If we’re using self-employed income and you want a 40-year mortgage term, what age does that take you to? If you will be 80, a lender is obviously going to have a few questions around that. Most lenders limit the term to age 70 as a maximum, although some go beyond that.
A benefit of being self-employed is that you could be in the latter years of work, but you might just be a shareholder – or your day-to-day tasks for the business are very limited. Employing people in your business could allow you to have a more flexible or longer mortgage term.
Typically, if you’re buying your first property and you’ve only got a small deposit, you will have a repayment mortgage – there are no other options. But if you are in the fortunate position to have a significant deposit, an interest only mortgage could potentially suit you, depending on your circumstances and your financial goals.
What additional fees or costs should I be aware of if I’m a self-employed First Time Buyer?
There are no additional costs if you’re self-employed and a First Time Buyer. Fees are all the same. You may be charged by your broker, there will be solicitors’ fees, survey fees for the property, and lender fees such as mortgage valuations, application fees or product fees. Finally, there may be stamp duty, depending on the purchase price of the property and your situation.Will I need a guarantor to get a mortgage because I’m self-employed?
No. Guarantors are a thing of the past, really. No lender would say they can only accept you with a guarantor – that just wouldn’t happen. The modern form of a guarantor is to share a mortgage with a parent or a family member, to benefit from their personal income.When we assess your situation, if you’re struggling to obtain a mortgage based on your self-employed income, we could look at your parents or family members joining the mortgage with you, if they’re willing. They may be able to help you borrow a sufficient amount of money to buy the property you want.
Are there any government schemes available to help self-employed First Time Buyers?
There’s no difference. We’re in June 2025 and there are currently no government schemes available for the self-employed specifically.There are general schemes available, such as shared ownership, which you can apply for as a self-employed First Time Buyer.
What if I have bad credit if I’m self-employed and looking at my first mortgage?
The combination of being self-employed, a First Time Buyer and having bad credit doesn’t directly make it harder to get a mortgage. But of course, your credit history is a key consideration.What type of bad credit do you have? When was it? Is it still active? Once we’ve assessed and reviewed your credit history, we’ll determine whether you can get a mortgage and which lenders we can look at.
Perhaps you have recovered your credit history enough to go to a high street bank. Otherwise you may be geared towards a lender with specific criteria for people with bad credit.
Once we’ve established that, we’ll know which lenders we’ll be dealing with. We can then fit your self-employed income and circumstances around the adverse credit and make sure all the criteria are aligned to your goals.
Can I use profits or dividends as income for the mortgage application?
Yes. Each lender has their own lending policy around whether they use salary and dividends or salary and net profit.If you run a company that doesn’t draw down all of the profits as dividends, it might be beneficial to use a lender that will use net profit, depending on your borrowing goals.
The key thing is to provide us with the correct information – your tax calculations, SA302s and your company’s financial accounts and bank statements. Then we can determine which way to go and which lender could maximise your borrowing potential, if necessary.
What impact does my business structure have on my mortgage application as a First Time Buyer?
If you’re a sole trader or in a partnership, it’s your profit from self-employment – or share of profit – as evidenced by the tax computation, SA302.If you run a limited company or you have an income from a corporate entity, the lender will be looking at salary and dividends or salary and net profit.
Can business funds be used for the down payments on a mortgage for a self-employed First Time Buyer?
Business funds can be used as a deposit if they are drawn out of the business as an income, salary or dividends.
But if you’re looking to loan money from the business to yourself, the majority of lenders won’t accept this – it adds complications to assessing your long-term affordability.
What do I do if I’ve previously been declined a mortgage as a self-employed First Time Buyer?
It depends on the reasons behind that and the circumstances. If you’ve gone to your bank directly, they’ve said no and it’s purely because you don’t fit the mould, speak to a broker.We’d advise you not to bother speaking to your lender directly because we’re likely to have access to them and we will explore the situation. If we believe we can help, we will of course research and recommend a different, more suitable lender.
Another benefit of using a broker is that we look at things holistically, so if you’re not quite fitting a lender’s criteria at this moment, or you can’t get the borrowing you need, we can guide you on what to do next.
Perhaps you need to build a bigger deposit, or file your latest year’s accounts. If you’ve not yet done them and you’re using year-old figures – perhaps your latest year has been better? We can guide you as to next steps.
How else can a mortgage broker help?
A key point is that when you’re self-employed in a manual role, such as bricklaying or in other trades, the term of mortgage might be reduced. Lenders may not believe you can continue to work beyond a certain age.But if you’re sitting at a desk every day, lenders will consider a much longer term. But certain lenders will go beyond those terms and that’s where a broker comes in very handy.
Also, just as an example, you might only have been self-employed for a year, but you are ready to move out and buy a house. You’ve got a good deposit. But because you’ve only got one year’s accounts, there’s a limited pool of lenders you can go to. If a lender won’t lend the money that you want, there are still things we can do.
Let’s assume, for example, you earned £25,000 in your first year and you’ve just started your second year trading. Perhaps you’ve just landed a great contract and you know that your income for the current tax year is going to be significantly more. You can’t yet prove it, because you’ve not finished the financial year.
This might be a scenario where a parent or a family member may be willing to go on a mortgage with you. You can use their income for a temporary period of two years or so, to get you that home.
Then, at the end of two years, you’ll have three years’ company accounts and have sustained that new, higher level of income. You can then switch to a new deal and take your parents off the mortgage.
That could be a helpful stepping stone onto the property ladder – and this is how speaking to a broker can help you find a solution. You could go to your bank, but if they don’t offer that option, you would never know about it.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.