Hey guys, I am looking to buy a house in the near future. We have a child on the way and an almost 10 year old. My husband makes about 50k and has been at the same job for about 10 years. I recently started my own business and I’m bringing in about 100k on my own. I have been told by several lenders that since I have only been in business for a short period of time, that I can’t use that as a source of income on a mortgage application. They recommend at least 2 years in tax returns. What options do we have? For reference, we are hoping to finance a 350k home with a 50-70k down payment. We are wanting to keep the payments low, but still pay about 4-5k a month to pay it down as quickly as possible.
You could try a non-QM loan. If your business was in the same industry as your previous experience you may be able to get by with 12 months of bank statements showing your revenue over the last year. The interest rates are higher than conventional but you may be eligible for more programs depending on the lender.
@Sage
This is the best option for your scenario, as long as the payment works.
@Sage
Freddie requires 12 months, Fannie 24.
This is entirely false. Freddie requires 12 months if the particular self-employed business has been in operation for 5+ years.
Being newly self-employed is not good in the eyes of the lender. You will need at least 1 year of filed tax returns showing your income. Keep in mind, you say you brought in 100k, but how much did you actually net after expenses? That is the number the lender will use.
You’ll need more seasoned income to qualify for this big loan. Your husband’s $50K won’t do it.
One option is to wait the two years, stash away a ton of extra funds in a high-yield savings account. Then you could buy down points to have a lower rate and then just throw cash at it till it’s paid off.
Two years of filed tax returns are needed for traditional sources. Non-traditional (Non-QM) will use other ways to document income. 1099’s, bank statements, etc. If you were in the same or similar line of work that you are now self-employed in, that will help your case. There are also other things that can be done with assets to help offset the income portion. If I can help further, let me know. TY Matt
You need two years’ tax return for a traditional mortgage.
How long have you been reporting the income from SE on tax returns?
Banks want tax returns and look at the bottom line after your write-offs. They’ll base it on what you pay taxes on. That’s why they require 2 years. Because you don’t get a W2 and pay stub you have to show stability also
You can get a loan just after your business income without your tax returns, but at a higher percentage, 10+. They are just looking at your bank statements. Just find a good broker
As a business owner, it sucks getting financing. Work for someone else? Just need your W2s. On your own? Everything up to a blood sample. They don’t care whether your employer knows what they’re doing or won’t just run off.
Going through this right now—my lender is amazing and you can still do FHA (which needs the 2-year tax returns) you just need to make sure the last two years are filed (I just did mine two weeks ago for 2022). Or you can do it conventional and you should be good assuming great FICO