The One Where Two Self-employed People Buy Their First Home
Well, we did it. We traded in avocado toast for a cozy, 4-bedroom home on the edge of the Rocky Mountains.
If you’re reading this… my partner Justin and I are officially homeowners!
The process of buying a home was somehow both “not as bad” and “just as nightmarish” as people describe it to be. Especially when you’re a business owner and a household of self-employed people. In this post, I want to share the ins and outs of our process for anyone out there who is embarking on this journey and wants to hear it like they’re talking to a friend.
And yeah, it’s long AF because I wanted to cover every single step along the way. So come back to it, take breaks, use what you need when you need it.
Note that this post may contain financial and legal topics, but nothing should be taken as legal or financial advise. The purpose of this post is to share our experience for educational purposes.
Let’s begin.
The Decision
Well, you have to first decide if you even want a house.
I am not one of those people who believes a house is the ultimate investment. You can also invest your money in other avenues and this decision is not for everyone. Being totally honest, Justin and I resisted this idea for a while. We enjoyed the perks of not having to maintain property, amenities in shared spaces, and more. We were fully convinced we’d be apartment dwellers for life and it was not on the priority list.
Until I got pregnant earlier this year.
We had just gotten engaged and I learned a few weeks later that I was expecting (spoiler: sadly, the pregnancy ended in loss and I wrote about that here). At the time however, a baby on the way meant we needed to expand our living space to accommodate the new soul in our home as well as any guests who wanted to come over to be with us or help during those early years.
Having kids is not the sole reason why people buy houses. But for us, it’s what turned the lightbulb on.
We currently live in a 2-bedroom apartment in Denver, CO — which we absolutely LOVE — but when we looked for 3+ rooms we only really found overly priced and weirdly formatted units (as if it was created for three roommates to co-habit) or houses for rent that were likely a bit over what mortgage for the same space would’ve been given the housing market at the time.
We essentially realized that we didn’t want to spend $3,600+ each month without building equity somewhere.
A few things to ask yourself when deciding:
Have I looked at housing inventory and prices in my area and is there something I could comfortably afford? Here’s an online calculator to help you understand the “can I even buy” decision, but note these free tools are not 100% accurate so I would speak directly to a financial advisor if possible.
Do I have disposable income or savings to use toward a down payment and closing costs? We looked at 15-25% down payment scenarios to give us a high-reaching visual goal while decision making, but there are many options to put little or a lot down upfront if needed.
Have I run the numbers on alternate options (moving to a different city, apartments vs. houses, etc.), and does this one give me the best long-term return for my financial goals?
Could I see myself spending time in this area for least 3-5 years? Bonus if even more.
Is a home something that is necessary for the lifestyle I want to live in the short-term? For example, me as a Content Creator meant I valued a space I could customize for my business workflow. We also wanted the privacy apartments can’t offer with a baby on the way.
How much time runway time do I need to start navigating this process? The process of purchasing a home can be as quick as 4-6 weeks or as long as a year. What is your hard deadline based on your life and financial circumstances?
Let’s talk finances
The part everyone wants to hear about, right?
Our decision to buy a house was purely an economic scenario of wanting to use the money we pay monthly for housing toward building equity and not simply using it for rent. We would’ve paid the same if not more in rent than our mortgage costs. In our example, we’re paying only $200 more per month for a 4-bedroom house compared to our 2-bedroom apartment. Wild.
While this may be ok for others as there are definitely other costs associated with buying a house to factor in (maintenance, fixes, higher utilities, etc.) and some people simply enjoy being renters, it wasn’t the case for us.
As two self-employed people, I was definitely nervous about the process. But it wasn’t bad at all.
What you really need is two years of tax returns per person and strong record keeping of your bank transactions. It’s more annoying than anything to have to “source” random influxes of income — since most self-employed people aren’t paid on a regular schedule — so be prepared for that and set your accounts up for success. More on that down below.
These tax returns will determine your monthly affordability by calculating each person’s average annual income minus any monthly payments toward debt.
Here’s where I really need business owners, self-employed folks, and content creators to listen:
I know all too well that thing we do of marking as much as we legally can as “expenses” to lower our taxable income — aka, pay less taxes by taking deductions. But this doesn’t serve you at all in the house buying process. Thankfully, we were still approved for our ideal budget in mind but it was definitely cutting it close.
If you have any inclination that you might want to buy a house in the next 1-2 years please plan accordingly and get your income levels on paper to look the way you need them. Getting pre-qualified for a home is free and easy so perhaps get that first as just a gauge of where you are to then plan for where you want to be.
On the debt front, we used the months before officially kicking off the process to ensure both of us had zero debt which was a huge plus and privilege. The only thing our record was monthly car payments, which don’t do much damage to credit scores. I am happy 800s club member and Justin was in the upper 700s (only lower because of having shorter credit history so ensure you are starting to build credit as soon as you’re legally able).
Costs associated with the home-buying process:
Your down payment — anything less than 20% means you’re paying an extra monthly fee in “private mortgage insurance,” so in my opinion yes those “only 3% down” deals might seem nice but can end up paying a lot more in non-equity (so money lost) for taking up those offers
Estimated closing costs of 3-6% of your loan amount (as in, the amount of money the banks will give you after the down payment) — this is everything from a loan “fee,” upfront home owners insurance, taxes, title company costs, government fees, transaction fees, and more
Moving fees from your current living situation to the new home (in Denver, a 2-bedroom is ~$1,000 for a fully done for you move)
Any renovations, fixes, or needs to get done for the house — ours is changing the bedroom carpets and finishing the garage which needed painting, electrical fixes and drywall touch ups
Immediate furnishing needs — listen, you don’t need to furnish an entire house during move-in but anything that is critically necessary should be budgeted for
The Process
We made the decision to move forward early in 2023 and simply started by looking at home listings online, researching the process, finding a potential realtor, etc. We then had to pause after our pregnancy loss and told ourselves January 2024 would be the new time to “start” seriously looking and putting out offers. This was solely based on our lease timeline (ending Winter 2024) and our dream fertility scenario (aka when we’d hoped to get pregnant again) which would then give us enough time to prep a home before a baby arrives later in the year.
If you know me though, once I’ve made a decision I am eager to get started and action on it…to Justin’s demise — ha! So in October 2023, I officially started the process by reaching out to a realtor on our list. This was a earlier than what I anticipated, but I just wanted to start to build a relationship with someone for this process and take it slow.
FINDING A REALTOR
We took a recommendation from a friend to work with Kate Kazell and we couldn’t have been happier. She also has a blog and website with tons of resources we sunk our teeth into before even reaching out. Check that out here.
She was local to the area, which for us was special since she had context a remote realtor could not offer. And the personal recommendation meant it was someone I could trust. I also followed her on social for a bit and loved the way I saw her working with clients, her favorite listings, and that she was local to the area.
TLDR; ask your homeowner friends and look up social media real estate creators in your area — follow them for a bit before committing, see how they work and what they talk about.
Kate, Justin and I met for coffee locally…and then things moved really quickly.
“TAKING IT SERIOUSLY”
She was incredibly thorough explaining the process — from search to closing — as well as knowledgeable on the state of the market. At the time, interest rates were still in the upper 7s and lower 8 percent which was considered “high” and caused a slight slow down in inventory but they were on a downward turn. Meaning that pretty soon we may be encountering a competitive market if those who are “holding” on buying a home for lower interest rates start jumping in.
We knew that we didn’t have the energetic capacity to be in a competitive market and while the higher interest rate made us gulp, we were open to refinancing at a later time. This financial decision was definitely a risk as no one can truly predict where the housing market will go. But what we did know is it wasn’t going to drop to the magical 3% numbers some folks once got. This was our best shot.
In terms of timeline, it was also explained that it could take at least 5 weeks for us to finalize something even on a “quick turnaround” since closing alone takes about a month. Our apartment lease had an option for us to leave early and we took it. As of November, we were officially were on the “hunt.”
PRE-APPROVAL
Wait, not so fast. You need a pre-approval letter before you can start “seriously” looking and putting in offers. This is important because it essentially guarantees (without it being a guarantee) what you can and can’t afford based on your income and essentially predicts what a loaner could give you for the purchase. In Denver at least, you can’t even look at houses without this.
Worth noting that my financial advisor has been suggesting doing the pre-approval or pre-qualifying process for a while. It seems to be a pretty low-risk way to truly understand where you are financially and will make starting everything smoother. Just ensure no one is pulling a “hard” credit inquiry as that does lower your score.
At the recommendation of Kate, we worked with the Strive Mortgage team as she has a great working relationship with them. And yet again, kudos to Kate for the recommendation as I can’t imagine working with anyone else for the financing process.
Like Kate, they were a local company and Dan, our Loan Officer, was from the area. The entire experience felt so smooth and personalized. I don’t have experiences working with a big bank for something like this, but I can bet that they wouldn’t hop on the phone with you to run through multiple scenarios, answer and all of your questions quickly as needed, or jump in to work on a Sunday because you’re putting an offer in. Phew!
How to prepare for the pre-approval step:
If you’re self-employed, they will need your last two-years of tax returns to verify income
ID documents and your social for a credit check
You will also want to ensure if you’re able, pay off credit cards or “easy” debt before your upcoming statement date so that credit looks clear
Bank statement(s) that prove you have the money you say you want to use for the down payment & closing process (3-6% of the loan amount)
I dive deeper into the finances piece in other sections down below.
SHOWINGS & OPEN HOUSES
Next step was sending Kate a list of preferences and search guardrails so she could put listings together for us. This is supposed to be the exciting part!
I’d suggest truly building out your dream scenario and being open with your realtor on what exactly is a wishlist items vs. absolutely must-haves. And be flexible. This way, you can see a lot of options, but not exactly waste your time on ones you know you won’t care for.
This was something Justin and I worked on long ago with everything from design elements we wanted, structural needs, our dos and don’ts, deal breakers and more. At first I thought I might turn off our realtor with a long laundry list of needs but it was actually hugely helpful for both parties as she found us a great range of listings and it helped us know exactly what to look for when we did showings.
In my opinion, at first you should look at a variety of homes in a) multiple areas and b) multiple price points just to get a feel for what’s out there and how you feel in different neighborhoods. Don’t go in thinking the first few appointments will land you the dream home. Go in with an open mind knowing you’re simply learning about yourself.
Take it from me: I was super bummed when the first few listings weren’t 100% winners and I wish someone told me that it’s definitely normal not to walk into your dream home on day one. There’s only so much photos and a website description can do for you.
We did a handful of “stacked viewing days” with our realtor where we went to 2-4 showings back to back which helped us leave with a better understanding of exactly where we wanted to be and what we were willing to be more or less “firm” on in terms of dos and don’ts.
Two things that changed for us: unexpectedly, some homes that had more bedrooms or space at a great price point were a turn off because we didn’t know what we were going to do with all that “house” at this stage of our lives. More space actually isn’t always better. And after seeing a few homes in Denver proper, we felt we weren’t getting anything much different to apartment life with busy streets, tight neighbors, and remodel looks that seemed rushed. The suburbs it is!
And so: we comfortably landed on 4 being the best must-have and three neighborhoods: Westminster/Arvada, Littleton and Lakewood. As well, with family planning we realized a renovated house (which yes would come at a higher price point) was a better scenario than a fixer upper or one that needed a lot of love before move-in. And I’m a DIY home loving gal, but small fixes here and there is just about where that all stopped for me.
After a few long days of looking, Justin and I realized that a few homes we had left as “maybes” were having open houses. These were homes Kate picked out for us that we didn’t schedule viewings for because they weren’t internet favorites from the listing, but something about them was definitely worth looking at.
The difference between Open Houses and scheduled showings is that anyone can walk in to an Open House. You’ll get a much less personalized experience and will be bumping into others who are looking, too. I also feel it is important to be transparent when you walk in and let the showing agent know that you’re working with a Realtor already and what stage of the process you’re in. It made for a lot less of a “salesy” feel during the event itself. If you have the time for it, definitely pop in and out of these. It may help make the “what we like and don’t like” part even smoother.
Our checklist for showings:
First of all, work with your realtor to understand how long the listing has been up (and why if it’s been on the market longer), any red flags or callouts (like structural issues reported in the listing or a pricey HOA fee)
Make sure the layout of the house works for the long-term, or at least the amount of years you plan to keep the house for. Changing layouts and structural elements can be a pain (and investment) so envision if the space could actually work for you.
Check the details in each and every single room, twice if it’s a potential listing you’ll like. There were some places we thought we loved at first and then after more closely looked around to see a lot of stuff needed work that we didn’t want to do.
Bring a measuring tape for spaces that you already know will be dedicated to something specific, and a list of your largest furniture to envision how it might fit in a space. I left my measuring tape at home most days, and it’s the one thing I really wish I had. I eyeballed everything with the measurements I took.
Consider the time of day and weather to ensure you get to see a place in its best possible light. We enjoyed going during the later afternoon window where it wasn’t too sunny, so it was a good gauge on what a place would look like for a majority of the day.
Before leaving the area, do a quick google maps search for the places you frequent: grocery stores of choice, distance to your medical team, the airport, favorite hangouts, friends’ houses, family, favorite shopping, schools, work, etc. How far are these places from you and is it accessible enough?
Bonus: I peeked into the Ring Neighborhood & NextDoor boards for areas we liked just to see what kind of crime reporting was happening. Can be even more valuable than general crime reports for the neighborhood — these are your future neighbors reporting what they see and what needs to be worked on!
Putting in an offer
And after a few weeks… we fell in love with not one but two houses!
Funny enough this happened during an “open house day” and not a scheduled listing. It was a weekend day we had free and a few “maybes” from our realtor’s initial search had open houses. Low risk and low pressure to just “check it out.”
We totally underestimated their listings online. So, worth repeating the earlier advice: be open. If there’s something to see, just make the time for it.
After the day ended for us, we immediately texted our realtor Kate and told her we loved two places. She quickly reached out to both sellers to get a sense of where they were at: did others put in offers, was the seller giving any incentives, anything they were looking for to accept an offer, and more. She really did her due diligence, on a Sunday of all days! This initial filter seemed to really drive success in the offer process.
We were leaning to one house (the one we ultimately went with) and she agreed based on discussions of what we loved/didn’t love about each one. Ultimately it came down to the extra space the other one had, and the Mountain Views (what really won me over immediately).
We reached out to our loan officer, Dan, to draft up a scenario of what our mortgage payment would look like if we went with that house — inclusive of estimated taxes for that specific area and home owner’s insurance — before formally putting in an offer. This was super important as every area can greatly differ in taxes and specific factors about the home would raise or decrease homeowner’s insurance. This one, for example, had taxes that were almost double our second choice for a home, but the reason was for better schools which would be a win for us looking to start a family.
Dan also walked us through scenarios where we could use a seller’s credit — aka extra money given to you at closing — to buy down our interest rate. I had no idea this was even possible: you could essentially pay a fee to reduce the interest rate down in the short or long-term. Really valuable in markets like this where rates start much higher. This is not for everyone, and some buy-downs are only an option if the seller pays for it (not you) so speak to your financial team about them to understand if it makes sense in your unique scenario.
After running the math a few different ways, for us it made most sense to reduce our interest rate in the short-term only versus on the 30-year plan, giving us time to refinance if the market truly does come down. With this option, we needed the seller to pay for it which meant in negotiations we had to give a little. We bought the house at their asking price, hoping that meant they’d throw in the credit.
And thankfully they accepted our offer.
Another element I think helped our offer was that we were willing to meet them at their ideal timeline to sell. It’s now early December and they hoped to close by end of month. We were willing to do that. I’ve heard of some scenarios where previous owners want to live in the house for a bit after closing, for example, and that would’ve sweetened the deal for them. Keep all these things in mind when putting an offer. Having a strong realtor who can advocate for you and get a strong temperature check read on the seller is important.
Having an offer accepted is not where the anxiety ends… it’s actually where it began for us.
Inspections, appraisals, underwriting
The immediate next step in offer acceptance is giving earnest money which is a small fee that acts as a deposit. The only ways out of this are normally if any of the following became bigger issues or non-negotiables we couldn’t work through.
Starting with inspections — which is essentially when a professional comes to check every single possible area of the home for damages, warnings, and things they recommend fixing. Speak to your realtor about specific flags in different areas and cities as you my need more than just a general inspection. We, for example, did Radon testing and Mold testing — particularly because I’m allergic to mold.
For some folks, this is where it all ends because you may realize the house needs much more work than you think and starts to feel like a money pit. At this time, you get to say “I’ll only move forward if you do xyz. We got really lucky that most “fixes” needed were quite minor. And the big one (a hail-damaged roof) was negotiated on and the seller agreed to fully fix before closing. Important: you should definitely attend your inspection as this is a great way to learn about the quirks of your potential new home and find where different things are (like our super hidden water shut-off valve).
Next point of stress: appraisals. This is when someone comes to review the property and based on several factors including the home itself and the surrounding area gives you a price the house “should” be at. Ideally, you need this to come in at listing price or higher. Otherwise, the bank will need you to make up the rest on your own which is where some folks get tagged with a much bigger cash ask than they initially planned for. And alas, ours was perfectly in range. We kept going.
One unexpected step with a little kick of anxiety: reading through the title company paperwork. The title company serves as our middleman in the process between seller and buyer. We were given documents about past transactions for the land and house, covenants (aka special little rules about the neighborhood), and more. The anxiety was as first time home buyers not having a clue what we were actually reading. This is where you really want to lean in to your realtor and ask them to help you find answers. While they are not technically experts in the legal process, they can lead you in the right direction for understanding. Ours totally did!
In parallel, this entire time we’ve been going through underwriting which is best described as the big loaning company investigating your entire financial life (so prepare to be financially nakey) to ensure that you do have the finances to purchase this specific house.
As someone who is very organized in business, and on behalf of my partner, it wasn’t that much of a headache to get all the paperwork needed. But it was certainly exhausting to read and sign what felt like hundreds of documents, pick homeowner’s insurance, send statement after statement, be questioned about every financial decision you’ve made recently, and have to explain yourself over and over.
As self-employed people this is also where it becomes complex. Most of us are not earning regular income and you may receive money in big fat chunks. A project here, a project there. Moving money from your business checking into personal checking, etc. Essentially every big dollar amount received (and sometimes sent) needed to be “sourced” to something. I understand, they want to make sure your money is clear of any fraudulent activity.
To clarify, all of these “annoying” asks come from the loaning entity themselves (the big banks) giving you the multiple six-figures of a loan. The Strive team, our loan officer + their partners were nothing but lovely and patient through it all. Every time I had 19372 questions, they answered clearly and walked us through everything with patience. They even suggested our current insurance broker who saved the day after the outrageous quotes we were getting. I’m so thankful we had this team.
We both really did start to lose sleep during this phase. The anxiety of “will this next step pass” and “what questions do they have now” started to get to us. Because it was happening during the holiday month, we had to force ourselves to disconnect from the outcome and trust everything was going to work out.
And finally, on the week of the estimated closing date we finally heard: you’re clear, let’s schedule the closing.
CLOSING TIME
We definitely cried and screamed when we heard those beautiful words.
Being cleared to close means no more chasing paperwork and outside parties to ensure things are going according to plan. We just had to wire our down payment and final closing costs (the largest amount of money we’ve ever seen leave our bank accounts) to the title company — aka the group managing the actual transaction for us.
Weeks prior, you’re receiving a loan estimate that includes a lot of these costs and my advice is to move money around that you intend to have for this process in your easiest-to-access account. In our example, we have a shared high-yield savings account with American Express. While we love banking with them, being an internet-based bank means there’s no physical branch to run to in a tight schedule and wires can take up to 3 business days.
Just ensure you tell your loan offer and team that you intend to consolidate your finances to one place as this could impact underwriting. Remember, they’re watching your every financial move so it’s important that you wait for the green light to do something like this.
And I’m so glad we did because as expected with the Christmas holidays and transaction amount (in the six-figures) our wire from Chase did not get approved unless we visited a bank in-person to very identification and such. We did this 48 hours before closing, eek!
Finally, the day of our closing was such a special day. Our vibes were high, we were so excited. We did one last walkthrough of the house to ensure it was in the promised condition and the past owners’ items were removed — don’t forget this step! — and then went to the title company’s offices to sign paperwork.
Up until now, everything was signed online, so it was honestly fun to finally have a stack of paperwork to put ink toward. It made it feel so “official.”
We parted ways with our realtor, thanked her by giving a small token of appreciation (closing gifts or thank you cards are so sweet), and went on our way to close the year as homeowners!
in summary
We are really happy we moved forward with this process despite the minor moments where it gave us a bit of stress. We feel so absolutely euphoric now that it’s over and are so excited to get started turning this house into a home.
In as consolidated of a conclusion as I can give, here’s what worked well and what we wish we did better.
The Good:
A local realtor and finance team who really understood the area and personalized the experience for us (here’s our realtor Kate and here’s Strive Mortgage
Seeing a range of different houses before narrowing down what we really liked and what we wanted to stop seeing more of
Really getting an understanding of different neighborhoods by driving around, looking up local places of interest, etc.
Being organized with our finances before actually starting the process — including paying off debt and reporting realistic earnings at tax time as two self-employed people
What We Wish We’d Changed:
Inspections: I personal would’ve asked more questions about how severe certain “small” stuff could be in the future and as a first-time home buyer just general understanding of different things. Our inspector was lovely, but I think I was at that point information overwhelmed and didn’t come prepared with the right questions.
Search Fatigue: I spent a lot of time looking through the search results our realtor put together (which was great on her part) but instead of being more open and trusting of my gut upfront I think I missed out on a lot of good listings we should’ve seen — like the house we ultimately bought. Still can’t believe it was on the “maybe” list. Take your time, don’t stress and don’t overwhelm yourself trying to see it all.
Trusting the process: wow, I wish we could take back the nights stressed about “will this milestone pass” (inspection, appraisal, underwriting) because any little hiccup along the way had a solution and we had a dang solid team. We were more supported than we allowed ourselves to believe. And honestly, if the house wasn’t for us then it wasn’t for us.
We are thrilled to bring you along this journey and plan to share so much more along the way. Leave a comment with questions or different topics you want to see us cover!