Home Loan Tips for Self-Employed and Immigrant Borrowers

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Home Loan Tips for Self-Employed and Immigrant Borrowers

June 27, 2024
asian family of three and their dog outside their home

Is it time to make the home of your dreams a reality? At East West Bank, we understand that each person’s financial situation is unique. If you’re self-employed, have fluctuations in your income, have a limited credit history, or want to access your home’s equity for a project, we can help.

“I had outgrown my old home and was ready for my new one,” said Maggie Lan, an entrepreneur and business owner. “As someone who is self-employed, it was difficult for me to apply for a full documentation loan showing steady W-2 income over several years. East West Bank helped me use my income from being self-employed to get not just one but two loans. My loan officer helped me use the existing equity in my old home for a home equity line of credit (HELOC) that let me pull cash out to use as the down payment on my new home and giving me the assurance that I could close on my new house if needed before my old one sold. That was a lifesaver. East West Bank guided me through the entire process, and I couldn’t have done it without them.”

Hustling toward homeownership

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According to the U.S. Bureau of Labor Statistics, 10% of workers in the United States are self-employed, and that figure is rising. Being self-employed can pose unique challenges when you’re trying to get a mortgage. Traditional or conforming mortgages from Fannie Mae or Freddie Mac cater primarily to W2 earners with consistent income streams. There aren’t as many financing options for nonconventional borrowers like entrepreneurs or self-employed business owners.

For nonconventional borrowers, there are several important considerations that can help with qualifying for a home loan:

  • Build a strong asset portfolio. “Many people who are entrepreneurs or are self-employed have unique circumstances,” said Kenneth Choi, SVP, Head of Consumer Lending & SBA, East West Bank. “They may have savings and other assets, and that’s one way they can qualify for a mortgage. East West Bank offers a flexible mortgage loan underwriting program that doesn’t look at just incomes.”

  • Avoid taking on new debt  for big-ticket items for at least two months before applying for a mortgage. According to Choi: “If you shop around for a car, you may have a lot of credit inquiries, and it could lower your credit score.”

  • Avoid moving funds in-between bank accounts. “Lenders like to see stability in your bank statements,” explained Choi. When there are large movements of funds, additional documentation is required. This can delay the loan process.

The American dream for everyone

According to Bankrate’s Financial Security survey, 74% of Americans believe that homeownership is a key component of the American dream. It’s also a key goal for many new immigrants who come to the United States to create a better life for themselves and their families. According to Realtor.com, about 41% of immigrants in the United States own their homes. This is in comparison to 66% of native-born Americans being homeowners.

You don’t need to be a U.S. citizen to buy a home in the United States. Permanent residents, recent immigrants, nonpermanent resident aliens, people with work or education visas, and non-resident foreign nationals are eligible. However, if you’re this type of borrower, you may have a limited credit history and / or no FICO Score, which is what most banks use to determine how likely you are to repay a loan.

At East West Bank, we have expertise and unique loan programs designed for non-U.S. citizens.

Here’s what you’ll need:

  •  If you have foreign assets, whether liquid or nonliquid, those may be eligible to help strengthen your mortgage application.

    • In the case of liquid assets, you will need to provide bank statements. If they are in other languages, we can help translate. Our branch staff can conduct business in more than 10 languages.
    • For nonliquid assets, you will need to provide proof of current valuation (such as an appraisal report or equivalent). If these need to be translated, the mortgage loan originator may certify the translation.

Cash-out refinance

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If you’ve lived in your home for several years, you may have built up significant equity that you can access for remodels, home improvement projects, or other needs. According to Realtor.com, 82% of home shoppers are staying put in their homes because they feel “locked-in” by low mortgage rates. Many of them are choosing to upgrade their existing homes and fund that through HELOCs.

For people who are self-employed, it can be hard to qualify for a HELOC. But at East West Bank, we can qualify borrowers based on their assets, rather than just income.


Pooling resources for home sweet home

For many families, a home is a haven and support structure for multiple generations. Some may choose to be coborrowers together. Families may often pool money for a larger down payment, and other relatives, or benefactors may contribute.

In these cases, a gift letter can be included with the loan application. The letter should state the amount of the gift, relationship to the homebuyer and indicate that no repayment is expected.

The key takeaway is that if you are self-employed, new to the country, have a limited credit history, or a unique circumstance, owning a home is still within reach. With advance planning, the right paperwork and an experienced lender, nonconventional borrowers can get into a dream home.

Ready to get started? Explore our unique home loan programs.