For freelancers dreaming of homeownership, securing a housing loan is a big step. But unlike regular employees with fixed payslips, freelancers must rely on different documents to prove financial capacity. One of the most critical? Your Income Tax Return (ITR). If you’re not filing your taxes, getting loan approval could be more difficult than expected.
What is an ITR and Why is It Required for Loans?
An Income Tax Return (ITR) is a government document that shows your annual income and tax payments. For housing loans, banks and lending institutions use it to assess your income stability. It’s not just a form—it’s your financial credibility on paper.
For freelancers, your ITR acts as your income proof in the absence of payslips or a Certificate of Employment.
Why Freelancers Must Prioritize ITR Filing
As a freelancer, you manage your own income sources. But banks need official records to gauge your ability to repay a loan. Here’s why your ITR matters:
- Credibility: Proves you’re earning legally and consistently.
- Eligibility: Most banks require at least two years of ITRs.
- Loan Approval: Without an ITR, you may face automatic disqualification.
- Higher Loan Amounts: A well-documented ITR history can help you qualify for bigger loans.
How to Secure Your ITR as a Freelancer
Here’s a step-by-step guide to help you start:
- Register with the BIR as a self-employed individual.
- Track your income and expenses monthly.
- Issue official receipts for every transaction.
- File your quarterly and annual ITRs using forms 1701 or 1701A.
- Keep copies of your submitted ITRs and payment confirmations.
- Consult a tax expert to ensure proper filing.
Tip: Make sure your declared income aligns with your bank deposits.
When Should You File Your ITR for Loan Application?
If you’re planning to apply for a housing loan within the year, make sure you have at least two consecutive years of ITRs filed. Most banks will ask for:
- Your latest BIR-stamped ITR
- Proof of tax payment (Form 2307 or tax receipts)
- Business registration documents (e.g., COR and DTI)
Start filing now—even if you’re not applying yet—so you’re ready when the opportunity comes.
Tips for Freelancers: How to Strengthen Your Loan Application
- File consistently to build your financial track record.
- Avoid underreporting—declare what you actually earn.
- Consider voluntary contributions (SSS, Pag-IBIG, PhilHealth) to add financial legitimacy.
- Keep digital copies of all documents for easy access.
- Use apps or spreadsheets to automate income tracking.
Many freelancers miss out on home financing just because they skip tax filing. Don’t let that be you. Start treating your freelance career like a business—file your ITR, keep records, and build your credibility.
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