Home Buying in 19050>Question Details

Misha, Renter in Havertown, PA

My husband and I are looking into what we would need to do to buy a house within the next 6 months - 1 year.

Asked by Misha, Havertown, PA Wed Oct 23, 2013

We'd like to purchase sooner but I believe we have some financial issues that will prevent us from doing so:

-We are both self-employed & receive 1099s
-husband has a unique work arrangement, he's self-employed for half of the year & the other half of the year he is paid as an Independent Contractor for a health club.
-I have only been self-employed for 11 months, with income ranging from $1200-$2500 a month.
-husband is usually paid in cash or via credit card and makes anywhere from $2500-$6000 a month
-I do not have a tax return from 2012, as I started my business in 12/2012 and before that was unemployed.
-we have about $10,000 saved for a downpayment; $5k in cc debt; owe about $2k on my husbands car & I have student loan debt of $40k
-credit scores are both in the low 600s. 624 for me last time checked.
What we are trying to figure out is if we would ever be able to get a loan & if not right now, what we would need to do to be able to qualify for one. Thank you.

Help the community by answering this question:



I am a real estate agent with Keller Williams, and I would be more than happy to assist you and your husband with the purchase of a new home. There are MANY mortgage options available to you and your husband.

Please give me a call or an email so that we can get the ball rolling. I hope to hear from you soon!

Jo Major
Keller Williams Realty Group
0 votes Thank Flag Link Thu Oct 24, 2013
Self employed borrowers require a 2 year history documented by tax returns in order to count that income. With your late start in 2012, you probably won't be able to use your income towards qualifying until you file your 2014 tax returns.

If your husband has been self employed for 2 yrs or more then you could use his income solely to qualify. Lenders will review his 2011 and 2012 Federal tax returns and basically go off of the NET income figures - what he makes after the CPA gets a hold of things and takes all deductions. Since self employed borrowers generally take the maximum amount of deductions available to them, this will normally result in a reduced income calculation.

The credit scores probably won't be an issue with an FHA mortgage. To get a conventional mortgage you'll probably need higher scores and more money in the bank. You'd need at least a 620 middle credit score and enough money to put 5% down and cover closing costs.

Your best thing to do now is to speak to a lender, have your credit ran and provide your last 2 years' tax returns. That will allow us to do some simple income calculations and tell you where you stand now and if you'll be able to do something within the near future. The good thing is that we can also advise you before you file your 2013 tax returns. If it's going to help to not take as many deductions, then at least you have the option of doing that or not.

Feel free to reach out to me if you would like some help.

Tony Grech | Mortgage Loan Originator | NMLS #977416
PMAC Lending Services, Inc.
Toll-free (855) 642-4762 ext. 278
Mobile (313) 622-7383
Fax (248) 945-4842

0 votes Thank Flag Link Thu Oct 24, 2013
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