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gsvar2004 
LSU Fan
Deep in the woods
Member since Nov 2007
379 posts
| home loan qualifications and the self employed (Posted on 12/9/12 at 6:30 pm)
can anyone tell me about the qualifications for the self employed person wanting to get a new mortgage.
my 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.
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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
63140 posts
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| re: home loan qualifications and the self employed (Posted on 12/9/12 at 7:12 pm to gsvar2004)
Tax returns with your Schedule C for 3 years or so most likely.
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LSUGUMBO 
New Orleans Saints Fan
Shreveport, LA
Member since Sep 2005
3802 posts
| re: home loan qualifications and the self employed (Posted on 12/10/12 at 6:36 am to gsvar2004)
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.
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VABuckeye 
Ohio State Fan
Oak Hill, VA
Member since Dec 2007
8114 posts
| re: home loan qualifications and the self employed (Posted on 12/10/12 at 8:04 am to gsvar2004)
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.
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lsu tigerdog
LSU Fan
Baton Rouge
Member since Nov 2007
91 posts
| re: home loan qualifications and the self employed (Posted on 12/10/12 at 9:13 am to gsvar2004)
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??
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gsvar2004
LSU Fan
Deep in the woods
Member since Nov 2007
379 posts
| re: home loan qualifications and the self employed (Posted on 12/10/12 at 12:58 pm to lsu tigerdog)
no losses.
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lsu tigerdog
LSU Fan
Baton Rouge
Member since Nov 2007
91 posts
| re: home loan qualifications and the self employed (Posted on 12/10/12 at 2:14 pm to gsvar2004)
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
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GFunk
LSU Fan
Denham Springs
Member since Feb 2011
7638 posts
| re: home loan qualifications and the self employed (Posted on 12/10/12 at 7:54 pm to lsu tigerdog)
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.
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gsvar2004
LSU Fan
Deep in the woods
Member since Nov 2007
379 posts
| re: home loan qualifications and the self employed (Posted on 12/10/12 at 8:38 pm to GFunk)
yeah gfunk im finding that out.
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yellowfin 
Illinois Fan
Paige is Pretty
Member since May 2006
51770 posts
| re: home loan qualifications and the self employed (Posted on 12/11/12 at 7:24 am to lsu tigerdog)
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
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GFunk
LSU Fan
Denham Springs
Member since Feb 2011
7638 posts
| re: home loan qualifications and the self employed (Posted on 12/11/12 at 8:28 am to yellowfin)
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.
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yellowfin
Illinois Fan
Paige is Pretty
Member since May 2006
51770 posts
| re: home loan qualifications and the self employed (Posted on 12/11/12 at 8:47 am to GFunk)
I'm not financing anything major anytime soon but I am set up and an S corp, I pay myself a very small salary
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VABuckeye
Ohio State Fan
Oak Hill, VA
Member since Dec 2007
8114 posts
| re: home loan qualifications and the self employed (Posted on 12/11/12 at 9:07 am to GFunk)
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
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novabill
LSU Fan
Crossville, TN
Member since Sep 2005
3932 posts
Online
| re: home loan qualifications and the self employed (Posted on 12/11/12 at 9:37 pm to LSURussian)
2 yrs tax returns
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Shankopotomus 
USA Fan
Waiting on my Hornets Team Icon
Member since Feb 2009
16827 posts
| re: home loan qualifications and the self employed (Posted on 12/12/12 at 10:49 am to gsvar2004)
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
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gsvar2004
LSU Fan
Deep in the woods
Member since Nov 2007
379 posts
| re: home loan qualifications and the self employed (Posted on 12/12/12 at 1:33 pm to Shankopotomus)
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. 
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VABuckeye
Ohio State Fan
Oak Hill, VA
Member since Dec 2007
8114 posts
| re: home loan qualifications and the self employed (Posted on 12/12/12 at 1:55 pm to gsvar2004)
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.
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