Buying a home when you're self-employed

We are thinking of moving, but we're a little worried about getting a Moregage (misspelled to try avoiding canoes). I am employed by a corporation, and my income has steadily grown over the last few years so I'm not worried about me.

But my wife has earned more than 50% of our income over the last couple years, but she is self-employed as a partner in an LLC, and so she doesn't get regular paychecks or a W2. At this point we're pretty concerned about getting approved, and of course I thought I'd ask this crowd if there are people who have gone through this process before.

The issue isn't the self employed, it is the self employed for 2 years part. They're likely going to want to see a longer history.

But usually you'd have to provide your tax return anyways, so I wouldn't worry too much about it.

Can you qualify on your income alone? Might be the better strategy.

Went though the same thing. I had 25% down in hand. Had cash in their bank and yet they would offer zero loan in my name. Since wife is nurse with long job history, she was offered all the money she might want and them some.

I will admit that I was new in the Country (albeit a 20 year customer of the bank) and the Brewery I was opening was brand new venture. You wife has tax returns that prove repeatable income.

While this is from a Canadian bank, the routine is much the same

here are several things to remember when applying for financing: • Loan-to-value matters. Offering a 10% downpayment will make the process far more difficult. They care more than ever about up-front equity. • Keep up with your payments. Make sure that you are up to date with the CRA before applying to a lender. • Be organized. Ensure that all your accounting and tax documentation is up to date, and that you are reporting • Pay off your credit. Get those outstanding cards and lines of credit paid down before you let your lender score you. • Be prepared to adjust your expectations. You may have to adjust your target price after talking to a lender. • See if your lender will ‘gross up’ your income. Some lenders may add a percentage when assessing your taxable and/or non-taxable income to allow for business expenses you incur. And above all, start early in the process, preferably with a pre-approval before you look for a home, because one thing’s for sure: you’ll be doing more hoop-jumping than you think.

In my history, one steady income may qualify you for as much or more than you are comfortable borrowing.

Apply solo and see what that offers you.

NOHOME wrote: Went though the same thing. I had 25% down in hand. Had cash in their bank and yet they would offer zero loan in my name. Since wife is nurse with long job history, she was offered all the money she might want and them some. I will admit that I was new in the Country (albeit a 20 year customer of the bank) and the Brewery I was opening was brand new venture. You wife has tax returns that prove repeatable income. While this is from a Canadian bank, the routine is much the same

here are several things to remember when applying for financing: • Loan-to-value matters. Offering a 10% downpayment will make the process far more difficult. They care more than ever about up-front equity. • Keep up with your payments. Make sure that you are up to date with the CRA before applying to a lender. • Be organized. Ensure that all your accounting and tax documentation is up to date, and that you are reporting • Pay off your credit. Get those outstanding cards and lines of credit paid down before you let your lender score you. • Be prepared to adjust your expectations. You may have to adjust your target price after talking to a lender. • See if your lender will ‘gross up’ your income. Some lenders may add a percentage when assessing your taxable and/or non-taxable income to allow for business expenses you incur. And above all, start early in the process, preferably with a pre-approval before you look for a home, because one thing’s for sure: you’ll be doing more hoop-jumping than you think.

Mind me asking what Canadian bank it was?

Call me and I'll explain it eight one seven 204-0028. And depending upon where you are located I might even be able to send you to people who'll do it.

You've got to thank the Super Majority and the Dodd-Frank Act - IT IS EVIL!! Trump says he's going to work on it, but what part and when?!

BTW this is not being political, just stating the facts as they pertain to self employed borrowers

John Welsh wrote: In my history, one steady income may qualify you for as much or more than you are comfortable borrowing.

QFT!!! It amazes me how much rope the banks will offer you to hang yourself with. I bought my last house recently divorced, during the recession, and positively poor and they offered me a full 50% more than I needed or wanted.

****sorry, not meaning to derail the thread. just talk to a mortgage broker and they will be happy to steer you in the right direction.

She should be getting a W2 whether she's self employed or not. If she isn't, you need to visit a good accountant and get things setup properly...

carguy123 wrote: You've got to thank the Super Majority and the Dodd-Frank Act - IT IS EVIL!! Trump says he's going to work on it, but what part and when?! BTW this is not being political, just stating the facts as they pertain to self employed borrowers

Not sure how this isn't political when you bring "the Super Majority" into it.

In any case, from a different point of view, Dodd Frank makes it more difficult to get a mortgage. It ultimately does protect the consumer and is ultimately a good thing for the majority of people.

This coming from someone who's life at work is very tedious and made a real PITA because of Dodd Frank.

Not getting a w2 is not unusual and it's not a problem. As long as she's been self employed for more than two years you should be good. If less as long as it's the same field someone should be able to work with you. If she owns 25% or more of the LLC they may want to see tax returns for the LLC going back at least two years. My wife and I just went through this in 2014 and again in 2016 for a refinance and it was easy peasy. I get w2s but I own >25% of the employer so they count me as self employed. My wife mostly only gets 1099 income and so is definitely considered self employed. And we had no problem with either loan other than providing lots of documentation.

If you're pushing the limits of the income to debt ratio then I'm sure it'll be more difficult. But I don't think you are or should do that! :)

My wife applied solo and got it easily with just her income. I am self employed

Self employed here, single income family. I had 1/3 the loan amount in CASH in the bank and couldn't get a loan. I tried my credit union and my mega bank, no dice. If I didn't have two years of INCREASING self employment income they wouldn't even do the paperwork. My first year of self employment was great, made bank. My second year I took a hit but we made enough to live on, so I was back to square one.

Hell, I already OWN a house in another state and they still wouldn't talk to me. Just boggles the mind man.

So we told the banks to piss off and did an owner finance deal instead with the home owner.

I posted about this a while back. Still haven't had luck getting a mortgage, but I have been self employed for less than a year, so that's my downfall.

We also have a rent-to-own and that seems to cause further complications for some institutions.

In reply to slefain:

Well that doesn't make me feel hopeful.

We have a related situation because of non-normal income (rental) and the more-gage on the rental place being an additional debt that shows up. The "lone" officer asked if we report our income from the rental, which we do, and he said that makes it a bunch easier. Apparently a lot of people (he suggested 3/4 in his experience) do not report rental income, which can make applying for a loan difficult since you then don't officially have any income from this property.

Bottom line: if the income is reported for tax purposes, you should be able to use it when applying for a 'lone'. If it isn't, you may be boned.

Shadow Economy.

SyntheticBlinkerFluid wrote: I posted about this a while back. Still haven't had luck getting a mortgage, but I have been self employed for less than a year, so that's my downfall. We also have a rent-to-own and that seems to cause further complications for some institutions.

how does that work out? I thought the point of rent to own was that you didn't get a mortgage?

I spoke with Carguy123 before my last purchase and was very glad I did.

My wife qualified for our loan alone. I was self employed doing property clean up, while i technically made more money the loan officer recomended just she apply first.

In reply to John Welsh :

Completely off topic and random but every time I see John Welsh, my mind reads Joe Walsh...

mtn wrote:

SyntheticBlinkerFluid wrote: I posted about this a while back. Still haven't had luck getting a mortgage, but I have been self employed for less than a year, so that's my downfall. We also have a rent-to-own and that seems to cause further complications for some institutions.

how does that work out? I thought the point of rent to own was that you didn't get a mortgage?

Well, it's more than I want to type, but basically part of our rent goes into the down payment on the house for when we get approved for a mortgage. There's a little more to it than that, but that's the easiest way to explain it.

In reply to Nick (Bo) Comstock:

Life's been good to me so far.

In reply to John Welsh :

He's just an ordinary average guy.

John Welsh wrote: In reply to Nick (Bo) Comstock: Life's been good to me so far.

Does your Maserati do 185?

thanks for the offer carguy - I'll be calling you.

The good: I've got great credentials, work history, and no debt. Her credet is great as well, but has student debt.

The bad: the LLC is only about 3 years old now. She's a 50% partner with 3 years of increasing revenue. She very recently (a month ago) changed from splitting time between her place and another, to working full time at her place.

I guess it's possible we will need to try to qualify under just my income, but I highly doubt we'd qualify for the amount we want.

from my perspective (having only done this once with US bank), banks make the whole "more gage" process such a joke.

Loan officers have no power to make decisions. Their only job is to play human telephone from the underwriter to the customer and back. And the underwriters have no power to make decisions, their only job is to type the customer info (that was relayed to them from the loan officer) into a computer and click enter, then call the loan officer to tell them what the computer says. And the computers are not designed to appreciate extenuating circumstances.

All in all, what could be done INSTANTLY by putting the customer in direct connection with the computer program, actually takes weeks and has tons of frustrating miscommunication. And it only costs the customer more money because their loan is paying to employ the loan officer and the underwriter.

mort-al, mort-uary, postmort-em, mort-ician, mort-gage.