Any advice for self employed qualifying for a loan?My AGI makes it seem as if I don't make very much money, which in turn will not qualify me

Asked by Lance, Vista, CA Sat May 28, 2011

for much I would be applying with my wife who is a teacher. I have great credit and she has good credit. The price range we would like to buy in is 250k- 350k.

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John Arendsen’s answer
John Arendsen, Agent, Leucadia, CA
Sun May 29, 2011
Most self employed folks are in your same predicament nowadays. Unfortunately there are no more stated income loans which was about the only vehicle small business/self employed folks had. They call them liars loans because many if not most folks did lie which ruined it for the ones that didn't.

I've read a lot of interesting and convincing comments on this thread and I truly hope that you will be able to get some positive results. But I've been trying to get my home of 30 years refied for that past 3 years to no avail. Lot's of folks who were glad to take my app but no one able to deliver the goods.

I've owned my very successful business for 26 years, have 800+ FICO, never been late on a payment, pay all my bills off every month, have no debt other than my home, have several rental properties that I own free and clear and a decent IRA that I've salvaged since '07. But truth be known once you get right down to the nitty gritty no one can really get me a loan because I don't show enough income. Go figure.
0 votes
Jeanne M. Re…, , San Marcos, CA
Sat May 28, 2011
I have a lender who I was just speaking to the other day with a very similar scenario to yours. He was able to pull income from the clients taxes to get him approved for a loan when three other lenders either couldn't or didn't want to spend the time to do it. If you'd like his contact info let me know. Are you interested in purchasing in California? I see you live in New Hampshire. My email is jredlinger@roadrunner.com if you need more info.

Thanks!

Jeanne
0 votes
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Sat May 28, 2011
Sole proprietorship (Schedule C) income uses the net profit (line 31) + depletion (line 12) + depreciation (line 13).

The AGI (line 37 on Form 1040) can take into consideration other expenses (educator expenses, health savings account deductions, student loan interest deduction, moving expenses, self-employment tax, IRA deduction, tuition/fees etc., etc.), most of which do not actually reduce the amount of your qualifying income.

Unless you are 100% confident your own underwriting analysis of your tax returns is correct, then getting your tax returns analyzed by a mortgage professional is the first step.

https://www.efanniemae.com/sf/formsdocs/forms/pdf/sellingtra… is Fannie Mae's form that can be used to calculate income off of tax returns.
0 votes
John Souerbry, Agent, Fairfield, CA
Sat May 28, 2011
As a fellow self-employed person and former mortgage broker, the answer I can offer from my experience is simple: make more money. Let's face it, if your tax return is truthful and accurate, you probably DON"T make the money you need not just to qualify, but also to reliably make payments.
My advice: DON'T TALK TO A MORTGAGE LENDER until you speak with a financial planner or counselor who can help you work out a complete financial plan that includes every aspect of your life. This is not something a mortgage lender can do (unless they are also trained as a personal financial counselor or CFP, which most aren't).
0 votes
FHA 203k Mor…, Other Pro, CA,
Sat May 28, 2011
There could be some deductions that can be added back into your income from your taxes so the first step is to have them reviewed by your loan officer / lender before counting yourself out.

Good luck.
0 votes
Scott Godzyk, Agent, Manchester, NH
Sat May 28, 2011
Lance the key for you is meeting with a local and trusted mortgage broker, they can prequailify you at no cost, they will look at your credit plus your financials and let you know if there are any programs that you may quailify for. They will know of self employed type loans or those for teachers if your state has those types of special programs.

http://www.trulia.com/blog/scott_godzyk/2010/10/where_do_i_i…

Please see my blog for advice and tips on getting a mortgage
Web Reference:  http://www.ScottSellsNH.com
0 votes
Ron Thomas, Agent, Fresno, CA
Sat May 28, 2011
I understand that there are some programs for Teachers.
Please contact a good Mortgage Broker or Bank and ask them.
Here, we have the Educational Employees Credit Union which is very good. Do you have them?
0 votes
Nick Ruiz, , San Diego, CA
Sat May 28, 2011
Lance,

Best suggestion is to go to your banking institution and see what they say (If they do home loans). Bring 2 years tax returns and 2 months paystubs for you and your wife.

That should be enough to let you know.

Good luck!

Nick
Web Reference:  http://www.NickRuiz.com
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