Self Employed MortgageSelf employed mortgage products can mean the difference between buying now or later.
Self Employed Mortgage
The freedom of being self employed is priceless, but self employed mortgage options can be hard to find. Typically vehicle and other creditors understand that you may not be showing much net profit because after all if you can avoid paying taxes on income why wouldn’t you? When it comes to buying a home however, its been a different story. There has been a need for self employed mortgage options and now we have them. As a lender we know and understand your true income might not reflect the standard of living that your net income on your tax returns might show, so we now have self employed mortgage options for you to use and hopefully take advantage of. Technically a self employed borrower can utilize any loan program available, including Conventional, USDA, VA, and FHA financing, but if you can’t qualify based off of what shows on your tax returns you need to know your self employed mortgage options.
Conventional Self Employed Mortgage
Before you use an alternative self employed mortgage making sure you can’t use conventional financing is important to do. When using conforming conventional financing your loan either gets computer underwritten through Fannie Mae or Freddie Mac. If you have been self employed for at least 5 years often through Freddie Mac we can get a self employed borrower approved using only their most recent tax return. That’s important because otherwise you would need 2 years of tax returns and the underwriter would average the income between those two years. So if you have had a great recent year, or if you plan ahead with your CPA your most recent tax returns could do the trick in getting you approved for a self employed mortgage utilizing conventional financing. The minimum down would be 5% but its possible the automated underwriting findings could want more down in order to qualify for providing just the most recent year.
Self Employed Mortgage Bank Statement Program
If you have been self employed for at least 2 years its possible we could use your bank statements to qualify for a mortgage. Either 12 months of your personal bank statements or 12 months of your business bank statements. Only your deposits would be calculated for income so the debits or net balance are not used for income calculation. Your score must be a 600 to qualify and you have to have a minimum of 10% down. This program can be used for primary residences, second homes, or investment properties. We would’t even look at your tax returns. The debt that shows up on your credit and any other property owned would be included in your debt ratios with a max up to 50%. This is an excellent self employed mortgage program and it has saved many deals where self employed borrowers couldn’t find financing elsewhere. Visit here for info on our bank statement mortgage program.
Self Employed Mortgage Debt Calculations
If using conventional or any other government loan program it’s important to remember that when calculating your debt ratios as a self employed borrower there are certain items we can add back in for usable income. This is the case for using conventional or any other financing method besides a bank statement mortgage program or a stated income program. For instance if you are using a schedule C then a portion of your mileage deduction can be added back in as usable income, and depreciation, along with a portion of a couple other items. Its important to have an expert take a second look at your tax returns if a loan originator has told you that you don’t make enough money. There are options out there and the level of nuance in regards to the guidelines for self employed mortgage loans is quite in depth. Additionally if you have a K-1 from a corporation you own or are part owners of, if there was a significant one time deduction that can be properly documented that isn’t likely to happen again for the foreseeable future, that can be added back in as usable income.
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