Job determine what kinds of financing you can receive?

Question

Hello BP,

Im brand new to BP and REI.

I am currently in sales and looking for jobs, although my main focus is real estate. Does the type of income or way I'm taxed effect what kind of loans I can receive. For example does working on salary, base plus commission, or straight commission matter? Or for example W2 or 1099?

Thank you ahead of time!

Chris Martin · Answer

When you get a conventional mortgage, Fannie Mae or Freddie Mac will 'buy' the mortgage from the bank that originates the mortgage. Fannie Mae published the 'rules' for how banks sell to them in their Selling Guide.

See https://www.fanniemae.com/content/guide/selling/b3/3.1/01.html for all the details relating to your question. Or you can talk to a mortgage broker who may provide insight as well.

Welcome to BP!

Account Closed · Answer

@Michael O'Connell

Being a new job is not a big deal so long as your new employment is in the same field. That's what my commercial loan officer said.

Sarah Ziehr · Answer

I would take the W2 job. As Brie says, when you are paid on a 1099 there is a lot more documentation you have to provide to obtain financing, and especially if you are starting new.

If you go the 1099 route they will likely make you wait 3 years before lending to you.

Chris Martin · Answer

"Fannie Mae’s underwriting guidelines emphasize the continuity of a borrower’s stable income. The stable and reliable flow of income is a key consideration in mortgage loan underwriting. Individuals who change jobs frequently, but who are nevertheless able to earn consistent and predictable income, are also considered to have a reliable flow of income for qualifying purposes.

"To demonstrate the likelihood that a consistent level of income will continue to be received for borrowers with less predictable sources of income, the lender must obtain information about prior earnings. Examples of less predictable income sources include commissions, bonuses, substantial amounts of overtime pay, or employment that is subject to time limits, such as contract employees or tradesmen. "

The above from the link I posted...

Michael O'Connell · Answer

I've been in sales almost the last 2 years. about 20 Months,

I just left my telecommunications sales job selling att/direct tv which was 100% comission and make about 37K. The 2 jobs I'm looking at are RV sales and for a industrial manufacture.

RV sales is 1099. $200 weekly plus commission, projected 35-55k first year

Industrial Manufacture sales is W2. $15-$20 an Hr plus comission. projected 40-50K first year

hopefully all that info helps and thanks for your help!

Brie Schmidt · Answer

Have you been is sales in the same industry type for 2 years? How is your current pay structured?

Michael O'Connell · Answer

I'm about to start a new job and am deciding between offers. If i'm hearing you correctly you are saying it is more difficult to get financing if your 1099 than W2 if its a brand new job? Also although it may be more difficult will it effect the type of loans I can get. for example can i get better interest rates or larger loan with w2 or 1099?

Michael O'Connell · Answer

@Brie Schmidt I'm about to start a new job and am deciding between offers. If i'm hearing you correctly you are saying it is more difficult to get financing if your 1099 than W2 if its a brand new job? Also although it may be more difficult will it effect the type of loans I can get. for example can i get better interest rates or larger loan with w2 or 1099?

Brie Schmidt · Answer

Yes. If you are W-2 it is much easier, if you are 1099 you need to provide business p&l and projections for future years.

I worked in sales with a base plus commission, as long as you are in the industry for 2 years and on a W-2 they should be able to count the whole thing. The problem comes in when you change jobs and one employer calls it a bonus and the other calls it a commission. If that happens only a portion of it can be used until you have the two years.

Job determine what kinds of financing you can receive?

Job determine what kinds of financing you can receive?

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