Mortgage employee vs. self-employed — direct comparison

Two people, same household income — one as employee, one as self-employed. Who gets the bigger mortgage? Spoiler: employee, by a lot.

How banks evaluate employees

• Income source: salary slips for last 3 months
• Verification: employer confirmation, account flow
• Stability check: 3–12 months at current employer
• Income at face value — net salary, plus regular bonuses

How banks evaluate self-employed

• Income source: 2 years of tax returns
• Verification: tax authority confirmation, account flow on business account
• Stability check: 2 complete tax years
• Income often discounted — bank takes 50–70 % of declared profit, especially with flat-rate expenses

Concrete comparison

Net annual income 720,000 CZK either way:

• Employee: bank sees 720,000. Max mortgage at 4.5 % over 25 years ≈ 4.6M CZK
• Self-employed (60 % flat-rate): bank sees 480,000. Max mortgage ≈ 3.0M CZK
• Self-employed (real expenses, 720,000 net profit declared): bank sees 720,000. Max mortgage ≈ 4.6M CZK

Lesson: declaring real income (not optimizing taxes) gets you the bigger mortgage.

Practical advice

• If you're switching from employee to self-employed: time the mortgage carefully. Either apply before switching, or wait 2 years after.
• If you're already self-employed and planning to apply: 2 years before, switch from flat-rate to real expenses if it gives higher declared income.
• If you have employed spouse: apply jointly. Their stable income is a multiplier.

FAQ