I have w2 and self employed income, but my FHA lender will only consider my w2 income. Know a lender?

Asked by Kulishnekar, San Jose, CA Thu Apr 16, 2009

In 2006, I had only self employed income. In 2007 and 2008, I had w -2 income from one employer and self employed income. I was laid off in 2008, but still had self employed income. In 2009, I have 3 part time w2 jobs and still have self employed income. The problem is that my current w2 jobs started in 2009 and the lender will not consider my self employed income. I trying to get an FHA loan. I have 10% down and my score is 678. Purchase price is around 200k in San Jose. Any suggestions?

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Web reference:


Elli Lou Ila…, Home Buyer, Washington, PA
Thu Oct 17, 2013
For fillable W-2 forms check this website PDFfiller.com at http://goo.gl/yMVY2p
You can fill the text fields, add a variety of checkmarks, digitally sign the form and even add pictures. After your pdf form is completed, it can be printed, emailed, faxed or saved on your computer. You can even send fillable pdf forms to your customers, employees, vendors and partners.
0 votes
Robert Chome…, , San Diego, CA
Fri Apr 17, 2009
You really need to just talk to a really skilled, experience mortgage loan officer and discuss it all. They will need your detailed employment history, last 2 years tax returns all pages and schedules, last 1 month paystubs and 2007 and 200 w-2s. Only then can they piece everything together and see what total income can be counted.

For this situation I would recommend a really good loan officer at a mortgage broker vs. bank. The broker will have dozens of options and may find an underwriter willing to count more of your income. The bank will generally just have their own in-house option.
Web Reference:  http://socalfhahomeloans.com
0 votes
, ,
Thu Apr 16, 2009
Hello Kulishnekar,

Grace's answer to you is exactly right.

I do FHA loans and would be more than happy to discuss your situation with you.

Please feel free to give me a call or send an email.

Best regards,
Elva Wormley
(408) 467-0500
0 votes
Grace Hanamo…, Agent, Cupertino, CA
Thu Apr 16, 2009
Hello Kulishnekar and thanks for your question.

Most FHA lenders will look to your filed income taxes to verify income, and provided that you have filed taxes and have reported the income from the W-2s and your self-employed income (with 1099s) on a Schedule C - Business Income, the lender should not have any problems including both paid wages and self-employment income as "income" for the purposes of a loan. When income is verifiable through a third party (such as the IRS), the lender can be assured that the income was "documented" and not overstated. If the self-employment wages were never reported to the IRS or recognized on your tax returns, however, then there will not be any FHA lender willing to consider unreported income as "income" for the purposes of determining your mortgage.

If you wish to include your self-employment income, you will have to refile your taxes and include the self-employment wages as income. Keep in mind that there will be tax consequences for adding this income including interest on the balance due and employment taxes (FICA for self-employed). Also, it will take the IRS between 10-12 weeks to process and record your revised taxes, so your income will not be verifiable until the taxes are processed and available by the IRS. In the future, please remember that you must report all income earned from any source in excess of $600 per annum on your tax returns, which will help you if apply for any consumer loan.

Finally, you might want to talk with a qualified mortgage broker to see if there are other programs for which you might qualify. There may even be ways to bring your FICO score up just enough to qualify for a conventional loan under another loan that might involve less "hoop jumping."

If you have any additional questions, or should like personal references for mortgage brokers who might be able to help, you can email me or your real estate professional for more assistance.

Good luck and happy house hunting!!

Grace Morioka, SRES, e-Pro
Area Pro Realty
Email: graceareaprorealty@att.net
0 votes
Bill Mccord, Agent, San Jose, CA
Thu Apr 16, 2009
If your self employed income (Gross) is supprted buy 3 years tax returns there should be no problem. If not you will pay a higher rate to a specialist lender.
In that case you will need to talk to a good Mortgage Broker.
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