Self-Employed First Time Buyer – 2025

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Home » First Time Buyers Scotland 2024 » Self Employed Mortgage First Time Buyer » Self-Employed First Time Buyer – 2025

Self-Employed First Time Buyer (Part 1 - 2025 Update)

Carolyn Dunion explains how the mortgage process works if you’re self-employed and a First Time Buyer.

Can you get a mortgage if you are self-employed and a First Time Buyer?

Yes, you can.

How does getting a mortgage as someone who is self-employed and a First Time Buyer work? Is it difficult?

It’s different but not particularly difficult. It does depend on your circumstances. The main challenge comes down to how the lender will calculate your income and how much evidence you have of that.

For someone employed in a straightforward PAYE job, lenders usually just ask for three months’ payslips. That’s quite straightforward. But the self-employed only declare their income annually with a tax return, so that’s the information used to make the mortgage calculations.

How many years do you have to be self-employed to get a mortgage as a First Time Buyer?

One lender will consider an application after one year of being self-employed, but most will want to see two to three years’ worth of evidence [information correct at the time of recording in July 2025].

Having said that, depending on the business and type of self-employment, often the first year doesn’t show very much profit. If that’s the case, although you might have accounts, it might not mean you can borrow very much money.

What types of mortgages are available for First Time Buyers who are self-employed?

There’s no difference in the types of mortgage products. It’s really just about whether you will be accepted for a mortgage. All the same fixed rates and trackers are available to self-employed people as to the employed.

How much deposit will I need for a mortgage if I’m a First Time Buyer and self-employed?

The minimum deposit of 5% is the same for everybody, whether you’re employed or self-employed. The thing to consider is that the smaller the deposit you have, the more rigorous the underwriting and checks are, because it’s a riskier proposition for the lender.

They would have a really good look at the business to understand whether what you’re doing is sustainable. They’ll be more picky if you’ve got a smaller deposit – but plenty of self-employed First Time Buyers do buy with just a 5% deposit.

How much can I borrow for a mortgage if I’m self-employed and a First Time Buyer?

There is a calculation involved, and it will all stem from what’s known as an SA302 or tax calculation – which your accountant will prepare for you. It’s usually done at the end of the fiscal tax year rather than the end of your accounting period. The accountant declares all the income you’ve had from any source and then works out the tax calculation.

The lender will use the self-employed income, dividends or salary declared on that document. If you have been trading for more than one year, they’ll usually average it over two years. However, if your income has dropped, they’ll work on the latest figure rather than averaging it.

How is a mortgage calculated for a self-employed First Time Buyer in the UK?

The previous answer basically covers it. It’s all down to this one document – the SA302 – that’s vitally important.

What documents do I need to apply for a mortgage as a self-employed First Time Buyer? How do I prove my income?

You need all the usual documents in terms of ID, proof of address, bank statements and these SA302 tax calculation documents. You will also need a document called a tax year overview, which is effectively the receipt for the tax due.

Depending on the lender, the complexity of your case and how much you’re trying to borrow, they might ask for business accounts and also business bank statements.

How can I improve my chances of getting a mortgage as someone who is self-employed and a First Time Buyer?

Starting a relationship with an advisor quite early is very helpful – because you only declare your income once per year. Once it’s done, it’s done. Then you’ve got to wait a whole year before there would be any variation.

When accountants are doing your self-assessment tax return, they are rightly trying to show you’ve earned as little as possible to reduce the tax. But then, of course, when you speak to somebody like me, you want your income to seem high.

We often work with clients over a year or even two years, talking about what they might need to declare and what’s possible for them. We also often have a three-way conversation with the client and the accountant to make sure that income is declared in a way we can use.

If, for example, the client had made a loan to their limited company and then receives loan repayments, that’s very tax efficient. That income will not go on their SA302 – but I also can’t use it for mortgage purposes.

If that client is looking for a mortgage, it would be a good idea not to take loan repayments that year. These are the sorts of conversations that we can have.

How do I apply for a mortgage as a self-employed First Time Buyer? How can a mortgage broker help?

Mortgage advisors are particularly well placed to help with self-employed mortgages. The actual application is fairly straightforward and doesn’t vary too much. But it’s all about that preparation, and making sure that your documents reflect your situation in a way we can use with a mortgage lender.

We’re a good source of up-to-date knowledge, to help you navigate that and make sure you put yourself in the best possible position.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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Self-Employed Mortgage First-Time Buyer (Part 2 - 2025 Update)

Carolyn Dunion continues the conversation on mortgages for self-employed First Time Buyers. Episode two of two, recorded in August 2025.

Is there any flexibility in the repayment terms for self-employed First Time Buyers?

This is a good question, because often the self-employed have quite variable income. Cash flow can be quite critical. So having a big monthly mortgage payment that’s due on the first of every month can be harder for self-employed people than for those in a salaried position.

In the main, there’s not really much flexibility on the repayment terms. Previously, you could opt for interest-only mortgages where you’d have a lower monthly payment. These do still exist, but they’re quite difficult to qualify for.

Instead, a self-employed person might choose to take the mortgage over the longest term possible to keep the monthly committed cost down. Most products offer an overpayment facility, so you can make additional payments to reduce that term when funds allow.

What additional fees or costs should I be aware of as a self-employed First Time Buyer?

From a mortgage perspective, there are no different costs for the self-employed compared to any other First Time Buyer. We will need some documents that an accountant may prepare for you.

That probably comes under what you’re already paying them. Other than that, there’s nothing different.

Will I need a guarantor to get a mortgage if I’m self-employed and a First Time Buyer?

No, you don’t need a guarantor because you’re self-employed. Whether that’s useful is a whole other podcast, but it’s not a requirement for the self-employed.

Are there any government schemes available to help self-employed First Time Buyers?

There are very few government schemes available at all right now. Obviously, that can change. But there’s nothing specifically aimed at helping the self-employed [correct at the time of recording in August 2025].

I’m self-employed. Can I use profits or dividends as income for the mortgage application?

Yes. However, most lenders look at what you have put through on your personal tax return. If you’ve got a legal structure like a limited company, and you’ve made the profit within the company but not received it and declared it as personal income, you’re unlikely to be able to use it.

Generally speaking, people pay themselves from the profits, which can become dividends in certain circumstances. If they’ve been declared on a personal tax return, that’s absolutely fine.

What effect does my business structure have on my mortgage application as a First Time Buyer? Are there specific requirements for different business structures?

This is a good question. You could be a sole trader, in a partnership or run a limited company – these are all legal structures in their own right.

From a mortgage perspective, it’s simple, because the lender is just interested in what you’ve personally declared on your tax return. It doesn’t matter whether that’s self-employed income as for a sole trader, or if it’s a combination of salary and dividends, which is typical for a limited company.

Lenders don’t really mind what that is, as long as it’s earned income from your business and it’s been declared on your tax return.

Can business funds be used for the down payments on a mortgage for a self-employed First Time Buyer?

If you take those funds, they become income to you. You can do that, but you may want to consult your accountant about what you take and when. If you’ve built up quite a large amount of cash to use as a deposit, it may be best not to take that out of the business in one tax year if you can avoid it.

Discuss that with an accountant, as it has to be part of your income and on your tax return to be used.

What if I’ve been previously declined for a mortgage as a self-employed First Time Buyer?

It depends why you were declined. There’s certainly no reason why you shouldn’t revisit it. For self-employed people, you may have applied quite early and were not making enough profit in the early days, which is quite common.

That might change over time, so it’s worth discussing. Speak to an advisor to understand why you were declined and explore the options.

How can a mortgage broker help here? Anything else to add?

With self-employed applicants, advisors are invaluable. The way that lenders perceive your income can change, so it’s important to make sure your paperwork is correct.

Sometimes we speak to people a year or even two years in advance of them applying for a mortgage. We often work directly with the client and their accountant to discuss what’s possible, what to declare on a personal tax return and what they would need for a mortgage.

You don’t want to take too much money out of a business and pay tax on it if you don’t need to. We can have that conversation. We can make a big difference to the outcome.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.