Since the internet has allowed more and more people the ability to work independently from home over the past decade, the financial industry is finally catching up and making it easier to obtain a mortgage or home equity line of credit (HELOC) for freelancers. Since independently contracted workers are viewed as small business owners under the US tax code, obtaining financing for large purchases, such as cars and homes, in the past was a serious challenge many people were unable to overcome. Thankfully, in today's financial climate, you can successfully obtain mortgage financing if you have enough equity in your property and the income necessary to support paying back the loan.

Follow these tips to easily overcome this financial obstacle and obtain the home equity loan you are seeking:

Be Meticulous with Your Records and Bookkeeping

When you apply for a HELOC loan as a freelancer, you will be asked to provide copies of both your personal and business's financial records. This is not something that you want to have to pull together at the last minute!

Always make a point of keeping meticulous records for your household and business. And, start doing so as long before you may want to apply for financing as possible.

Pay Yourself a Salary and Make Your Estimated Tax Payments 

Since banks have a much easier time dealing with income that is paid in regular increments like traditional salaries, you should pay yourself each month from your business checking account into your personal account. This will keep your business income separate from your household income, and it will provide you with a paper trail that you can show to the bank to prove that you have a "regular" monthly income. If you can keep the amount relatively steady from one month to another, this will be favorable when you make your loan application.

In addition to your salary, you also need to ensure that you make your quarterly estimated tax payments to the Internal Revenue Service (IRS). The IRS requires that you pay taxes four times each year on any independent contractor income that you receive from your clients. Your business tax preparation software or accountant can calculate the amount of your taxes that are due to be paid, and give you the necessary paperwork to pay them. You also need to file all of your state and federal taxes by their due dates as well. Late payments or filings can greatly affect your ability to be approved for a loan.

Conclusion

By following these tips, you will raise your odds of getting approved for the HELOC financing on your home. Since the application process for mortgage financing can be daunting for freelancers, you should contact a mortgage broker in your local area who is familiar with financing options for those who are self-employed and are small business owners.

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