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| home loan qualifications and the self employed Posted by gsvar2004 can anyone tell me about the qualifications for the self employed person wanting to get a new mortgage.  on 12/9 at 6:30 pmmy wife is a teacher and i have been self employed for right at 2 years and we want to upgrade to a bigger house maybe with a baby on the way, but im concerned about my position and what we will need paperwork wise to qualify for a new homeloan. We currently own a home FWIW. Reply • Back to Top |
| Tax returns with your Schedule C for 3 years or so most likely. Reply • Back to Top |
| You will need to prove self-employed income for 2 years, so it sounds like you picked the right time, although you might have to wait until you file 2012 taxes. Depends on how much of a stickler your lender is. Reply • Back to Top |
| It's been awhile but I believe they're going to be looking at AGI for a self-employed borrower. If you write off a boatload of your income you won't be getting it back to qualify for the loan. Reply • Back to Top |
| being self employed, the lenders want to see 2 yrs complete tax returns, personal and business plus any schedules on your returns.the lender will average out your income for last 2 yrs, most important question, do you show losses on your returns?? Reply • Back to Top |
| no losses. Reply • Back to Top |
| i'm a mtg broker here in baton rouge, if you like, call me when you get a chance, it'd be great to earn your business, 225.291.7901 x 224. since you have no losses,you should be fine, the most important thing is just reviewing your returns for 2010 & 2011 Reply • Back to Top |
| They'll ask for bank statements, and more than likely give you a percentage of those as you gross income. Tough to go conventional if you're writing stuff off. Reply • Back to Top |
| yeah gfunk im finding that out. Reply • Back to Top |
| Do you take into account things like bonus depreciation or sec 179 when you figure income for self employed? I have a loss but it includes about 65k of depreciation in 2011 Reply • Back to Top |
| You ought to bite the bullet and pay yourself a salary or pay yourself by the hour somehow. Maybe an S-Corp and name yourself an employee? I'm no tax expert but I ran into this back in June myself. I had an LLC that I expensed some things to in order to lower my tax bracket. They used my W-2'd income at first, and then when I submitted tax returns, they had to use my AGI (Adjusted Gross Income). I ended up dissolving the business through the SOS office. The write-offs I was using it for weren't worth my inability to get approved for a home loan. Best of luck. Reply • Back to Top |
| I'm not financing anything major anytime soon but I am set up and an S corp, I pay myself a very small salary Reply • Back to Top |
| You can be an LLC and still receive a W2. You just have to file a form to be treated as an S Corp when you file. That's what I do every year. Note that my LLC is for earning income and not for writing off losses. Still, to get a mortgage I'd have to supply personal and business tax returns and my income for borrowing would be based off of my AGI. This post was edited on 12/11 at 9:09 am Reply • Back to Top |
| 2 yrs tax returns Reply • Back to Top |
| Always been one of the disadvantages of being self-employed With all of the good things you can do with depreciation, expenses, accrual accounting etc. - the downside is if you show too little income on your tax return you may have a difficult time obtaining a loan. Catch-22 it seems in a way Reply • Back to Top |
yeah the point im at now is claiming more 2012 to bite the bullet to qualify for a bigger loan. im gonna have to wait till march or so it seems now.  Reply • Back to Top |
| They're going to average your income over the two year period. That is a given. IOW, as a self employed borrower the mortgage lender will take the worst possible scenario when they calculate your income. Reply • Back to Top • Refresh |
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