Home Buying in 80206>Question Details

Mike Fatica, Home Buyer in Denver, CO

Self employed mortgage question

Asked by Mike Fatica, Denver, CO Tue Dec 11, 2012

I'm self employed and we are looking for a mortgage in the 350K range. We have a 20% down payment, 800 credit etc. and the first lender I spoke with said that if my AGI increased or decreased between 2010 and 2011, they can't work with me. My AGI did increase by 30% between 2010 and 2011. Is this common practice? What alternatives do I have? Thanks!

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17
Robert McGuire’s answer
Hey Mike,

I like James Ponza's answer below. You might want to check in with a local lender like 1st Bank, BBA Compass Bank, etc. They are not bound by all of the federal guidelines that sometimes border on the ridiculous. I also have some mortgage brokers who are familiar with the self-employed and can tailor a loan especially for you with your great credit scores and track record. As a fellow 'self-employed buyer, I say keep moving forward with your purchase congratulations on your success in business. And Go Packers!! (:

Robert McGuire ASR
Realtor/Consultant
Your Castle Real Estate
Direct - 303-669-1246
http://about.me/robertmcguire33
0 votes Thank Flag Link Tue Dec 11, 2012
Mike... you should feel confident, based on your initial info. you are a great candidate for a mortgage loan. I have several lenders who can assist you and help get you a stress-free, no obligation pre-qualification (assuming there aren't any other financial issues, of course). Some lenders are really nervous these days, as you'll see once you start the process. Give me a call and I'd be happy to put you in contact with some options that you can choose from, on your terms.

Kim Davis
Broker/Owner
Re/Max of Cherry Creek Inc.
303.218.8373
1 vote Thank Flag Link Tue Dec 11, 2012
Thanks for your answer. We're collecting answers from local banks and CUs
Flag Tue Dec 11, 2012
Call Glen Holguin at Guild Mortgage at 303-495-2995.

Ethan Besser
Keller Williams
303-856-8980
0 votes Thank Flag Link Tue Oct 8, 2013
I would love to help, please message me!
0 votes Thank Flag Link Tue Oct 8, 2013
Hi Mike,

I spoke with Carl Hammond - 303-798-2697 - yesterday at The Mortgage Network. He has some interesting and exotic programs that appear to be tailor made for your situation. He has some 'portfolio' lending products with great alternatives to the strict guidelines of the 'big banks'. Even taking your assets in consideration when doing loan approval. Let me know if I can be of further help with your purchase.

Robert McGuire ASR
Broker/Consultant
Your Castle Real Estate
Direct - 303-669-1246
http://about.me/robertmcguire33
0 votes Thank Flag Link Fri Oct 4, 2013
In evaluating self employed income we only look at past 2 years so why they care about 2010 is bewildering to me. As for income interpretation, if the self employed income increase we use a 2 year average, however if it decreased we only use 12. Basically we use the worst case scenario. Also depreciation is not held against you. please contact me as I would invite the opportunity to review it for you! We can set up an appointment if it is more comfortable for you.
0 votes Thank Flag Link Fri Oct 4, 2013
Mike,

There are some strange and bizarre guidelines in place now after the recent changes with the big banks. You can check with Compass Bank and other local banks that often have their own guidelines apart from the HUD and conventional guidelines that make little or no sense in situations like yours.

Robert McGuire
Broker/Consultant
Your Castle Real Estate
http://about.me/robertmcguire33
0 votes Thank Flag Link Sun Sep 29, 2013
That sounds downright silly. If your income INCREASED you wouldn't be eligible? Find a new lender. You'll often find the best ones if you speak with a local Realtor. They know who can get things done efficiently.
0 votes Thank Flag Link Sun Dec 16, 2012
Hi Mike -- that makes no sense whatsoever. Be very weary of lenders in general. I hate to say that, but it's true. As long as you can qualify based on what you've made in 2012, the fact that you lost 30% is irrelevant.

Mortgage qualifications are based on debt-to-income ratio. Even if you can go to $350K, you might be able to find something for less but still be able to buy. With 20% down and high credit scores, you should be able to buy a home.

I have a few excellent lenders I could refer you to if you'd like the "facts." If would be a shame NOT to buy if you can. Prices in the area are at rock bottom (but starting to climb as of 2012) and interest rates are below 4%.

I hope this was helpful. If you would like a couple of lenders to call, don't hesitate to contact me. Julie Montgomery, RE/MAX Masters, Inc. 303-906-3150 or http://www.jmontgomery.com
0 votes Thank Flag Link Sun Dec 16, 2012
I'd love to help you Mike.

We are a direct FANNIE MAE Lender and we love increasing income :)

We would take the average of your last 2 years tax returns to qualify you.

Give me a ring or shoot me an email and I'm happy to help.

Sincerly,

Morgan Pennington
Branch Manager
Gateway Mortgage Group
720.440.9741 Ext 101
morgan.pennington@gatewayloan.com
http://www.gatewaydenver.com
0 votes Thank Flag Link Tue Dec 11, 2012
Hi Mike,
Typically banks are concerned with decreases in self-employed income; increases year over year are usually acceptable. the bank you are working with must have some "overlay" that is causing the problem. My recommendation would be to deal directly with your banking institution such as where your checking and savings accounts are; have you tried that? How long have you been self-employed?
0 votes Thank Flag Link Tue Dec 11, 2012
Mike, sometimes the bank wants to use the lower of the two years in question. If your 2012 income is not "tracking" with 2011 on the P&L, or if you are showing a decrease for 2012 from 2011, they may just use the lower of the two years. Did they mention any of this? If you have been denied for the loan, you will receive a letter with more detail.
Flag Tue Dec 11, 2012
>have you tried that? How long have you been self-employed?

Yep, that's who I'm working with. I've been self employed since 2005
Flag Tue Dec 11, 2012
Hi Mike, The most common practice is to average the income from the most recent 2 years tax returns. It is also a good idea to explain, in writing, what caused your income to increase. Growth in revenue and income is a good thing! On the other side of the equation, if your income had declined, that could be a problem; most likely we would use the lower of the most recent years income in that case.
0 votes Thank Flag Link Tue Dec 11, 2012
I would contact Rick Kinzer with EverBank. He just closed a deal for a self-employed client of mine (he did both a refi and new purchase for him). He is the best in the biz. 720-626-3014
0 votes Thank Flag Link Tue Dec 11, 2012
it isn't that you can't get a loan with an increase in income it is that they will look at it and as more details as to why. Be prepared to give a very detailed P and L statement along with other types of documentation showing the increase. They may also take an average since you have only had 1 year of increased income.
0 votes Thank Flag Link Tue Dec 11, 2012
No this is not common practice, if your AGI is increasing that is a good sign and what underwriters like to see. If you'd like a second opinion we'd be happy to assist. We are based right here in Colorado and do alot of work in the Denver area.

Shoot me an email at NNetherton@houseloan.com and we can get you some more information.



NIc Netherton
970-590-5021
http://www.nicnethertonloans.com
0 votes Thank Flag Link Tue Dec 11, 2012
I have a great lender to refer you to, who can give you a second opinion . Feel free to contact me directly.
0 votes Thank Flag Link Tue Dec 11, 2012
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