Financing in Buffalo>Question Details

Mandolyn221, Home Buyer in Buffalo, NY

FHA loan approval with 1099 income

Asked by Mandolyn221, Buffalo, NY Tue Oct 18, 2011

My husband and I are trying to buy our first home, and just found out we were denied by the underwriter. I am a w-2 employee, he is a chiropractor that works with a group of other doctors but is paid on a 1099. We were told that there was "someone out there that would give us a loan" but after the denial I am starting to question we will ever get approved. He has been working on a 1099 since July of 2010, so we will have the 2 years of taxes in January. Is this all we need for the approval? We found the perfect house and I don't want to wait until January because I am afraid we will loose it. Or do we need him to actually have been there for 2 calendar years meaning we would have to wait until July of 2012. I am so confused and upset after the denial, we both have good credit (both over a 700) and we make more than enough money to afford the house. Please help!

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You should definitely be able to make this work by presenting the correct information and documentation at the time of application. Make sure you have the complete package ready for the lender, no missing pages, nothing left unsaid etc. Worst thing you can do is make an underwriter make assumptions. I would put together the following: 2 years W2s for you, 30 days of most recent paystubs for you, 2 months bank statements ALL PAGES (even the last one if it is blank but says page x of y) - this account should show the money coming in from the 1099 income, any asset accounts ALL PAGES, husband's 1099 from 2010 + full tax returns from 2010 and 2009 (make sure they are signed and dated and have all schedules), see if you can get the articles of incorporation or the corporate structure documents to show your husband is not an "owner" of the company and thus not really "self employed" (he can simply be termed "chiropractor" on the application - make sure the loan officer does not check the "self employed" box on the application), you could prepare bank statements from Jan1st 2011 to current ALL PAGES that shows his 1099 income, I would prepare a detailed letter of explanation indicating your husband's hire date, why he changed employers, what he was doing previous to starting with his current employer, if he completed any additional coursework that allowed him to get his license etc (include any pertinent diplomas or even go as far as providing a copy of his transcript...) - be as detailed as possible, provide any W2s, K1s, 1099s etc for your husband and you for 2009 and 2010, I would also ask for a verification of employment form from your lender and have them all filled appropriately by all of you and your husband's previous and current employers for the last 2 full years. I know that this seems like a lot, but trust me, if you want to get this done - this is all going to be needed - better to get it all up front, so there is no room for that underwriter assumption that I mentioned. If the income is there and was there prior to July 2010, this is definitely something that can get done. Email me with additional questions.

Ryan McPartland
Investor Support Forensic Underwriter
JPMorgan Chase Bank
1 vote Thank Flag Link Thu Oct 20, 2011
Is your husband a licensed chiropractor for more then 2 years? I would need to see your tax returns for the last 2 years, last month's paystubs and W2s (for last 2 years). to determine if you have enough income to qualify for the mortgage you are looking for. You can contact me.
1 vote Thank Flag Link Tue Oct 18, 2011
The best advice I can offer is to talk with other lenders about your situation. You will then know what to expect without question. Thanks!
0 votes Thank Flag Link Tue Oct 18, 2011
Most lenders will be able to accept your husband's 1099 income when you file your 2011 tax returns. You should not have to wait for the full two years. Some lenders MAY take only one year of 1099 income, so I would suggest you keep trying. A loan consultant should be able to tell you pretty quickly if they need the two years or not. You should not have to go through a full approval/decline to know if their guidelines need one or two years of 1099 employment. Best of luck.
0 votes Thank Flag Link Tue Oct 18, 2011
Consider shopping around--start with the bank you currently do business with, any other banks, credit unions, mortgage brokers, etc.
0 votes Thank Flag Link Tue Oct 18, 2011
It is a different situation, he does not own the business... does not have a dba or anything like that. He is paid by the person that owns the business on a 1099 based on a percentage of the clients that he sees, so it is not the typical cut and dry situation. I am hoping someone can think out of the box and help us, if anyone knows someone in the buffalo area that can help I would really appreciate it.
0 votes Thank Flag Link Tue Oct 18, 2011
The question is, "Is your husband really self-employed?" Does he own the business? Does he generate his own clients and get paid based on his clientele? Is so, he is considered self-employed. Just being paid on a 1099 doesn't mean you own a business. For example, I just closed a loan for a Truck Driver who had worked for a local company for years and was paid on a W-2. He decided to move to another company but that company wanted to pay him straight on a fixed driving schedule but on a 1099. We were able to document that he didn't own the truck and did not have the responsibility or expense of any maintenance or upkeep of the truck. If your LO is sharp, the deal can be put together. Your situation is not the norm but if you found yourself in the hands of an inexperienced loan officer or a ultra conservative lender, they just don't understand that not everybody fits into the shoebox. Contact a local Realtor and ask them for a recommendation

Best of Luck!
0 votes Thank Flag Link Tue Oct 18, 2011
1099's income is good for mortgage. You need to show two years of work. If some one is not working for two yers he or she can get a co-signer to get the mortgage.You may consider that.Good luck.
0 votes Thank Flag Link Tue Oct 18, 2011
Talk to some other loan officers with banks or lenders. I had a loan denied and moved the whole package over to Wells Fargo who closed it in 23 days. It can happen. Some lenders just are not easy to deal with, but others are. Make some calls.
0 votes Thank Flag Link Tue Oct 18, 2011
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