Mortgage for self-employed: how to succeed when the bank requires stable income?
People working on a trade license can also take advantage of mortgage loans for housing. While some rules, such as the maximum amount of loan towards the property value, are completely identical to employees, their proof of real income significantly differs for logical reasons.
The Czech Republic is a country where a large number of people work in the entrepreneurial regime. Currently, their number has increased by 19 thousand to 1.174 million year on year and the growth trend continues the long-term tendency where the number of self-employed people in the Czech Republic even increased by 28 thousand last year.
Although it is believed that the large number of self-employed people (OSVČ) in the Czech Republic is not just due to the entrepreneurial spirit, but also to specific tax breaks (lump-sum taxes or lump-sum expenses), in practice it means a unique position for many of them in terms of getting a mortgage loan.
"The main difference between self-employed individuals and employees is the administrative demands when demonstrating sufficient creditworthiness for obtaining a mortgage. While employees usually need to provide proof of income and account statements (some places only require account statements), the self-employed have to provide considerably more documents: tax returns (often for up to two years), confirmation of their submission, proof of tax payment, etc,"
Mortgage specialist Adam Pyszko from Finotéka.cz described the administrative obstacles when applying for a mortgage for LP-Life.cz.
If a self-employed person, for example, uses the mentioned expense allowances, this can further present them in a slightly different light to the bank. Especially if they do not have high costs in their line of business and uses a 60% expense allowance (which is next to 80% and 40% for selected professions most common), their income according to the tax return can be lower than what they actually have at their disposal.
So if the entrepreneur pays taxes by documenting actual business expenses, banks tend to be more open when approving a mortgage. However, the particular entrepreneur then has to weigh up all the pros and cons associated with the administration of individual tax regimes.
Banks also measure creditworthiness in terms of profession. This is of interest to the bank even for employees, as some fields are considered more stable than others. Sole proprietorships, such as lawyers with their own practice or doctors, are then seen as advantageous in the eyes of banks.
As tax returns are filed retrospectively for the past year (this year the deadline for electronic submissions was 2nd May 2025), the business must have been running for some time when filing two returns and must of course be profitable. Banks approach this obligation differently, so an overview of the requirements of individual financial institutions could be the basis for success.
"Another fundamental difference is the way individual institutions calculate the resulting income. Each bank proceeds differently and the differences can amount to tens of thousands of crowns, which significantly affects the amount of possible mortgage loan,"
reminded the editorial board Adam Pyszko and outlined, what amounts can be involved by choosing the right bank.
