Charlotte, NC · Member since 2014 · 241 posts · 21 votes
Hey I currently wholesale in charlotte,north carolina with dreams of one day buying a house. However from my understanding being self employed can cause some obstacles in order to be approved for a home loan. I was wondering if anyone had experience on how to get around those obstacles? An what are some of the requirements
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
11y
2 years of reported, taxable, net income of enough to qualify for the loan you want. In very broad, general terms, the house you can qualify for will be about 3-4 times your yearly net income, before taxes.
It's really not harder to qualify self-employed as long as you have enough provable income to qualify for the mortgage. What trips up self-employed people is when they write off so much that they don't show any after tax income on their tax returns.
To qualify, you'll need to show adequate, stable income for at least the last two years from your business. The lender will likely ask you to provide two years complete tax returns (personal and corporate, where applicable) and a business license or CPA letter proving the existence of the business. If your tax returns show the net income (after deductions) you need to qualify and everything else on your loan application looks good, it should be easy to get the loan funded.
Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
11y
Start working with a mortgage broker 6 months before you will need the loan. They can help you understand what hurdles you might have and how to get prepared.
Make sure your credit is solid and pay down any debts you can. A car loan or credit card debt could be the difference between an approval or denial.
Real Estate Agent · San Antonio, TX · Member since 2015 · 21 posts · 10 votes
11y
Agreed. As Mark stated above, proving 2 years of income is essential and write offs (as necessary and tempting as they can be) can place some serious road blocks on your path to home ownership. Back in my MH (Manufactured Home) days I used to recommend self employed candidates to not only do a better job with their book keeping and filing but to also consistently place income in their personal back account in a weekly, bi-weekly or monthly basis to show fluency. It didn't always help but it never hurt either.
thanks for the info, since I'm still in school in the past I couldn't meet the requirements of 2 years of stable employment. I have only been wholesaling successfully for the past few months. However I'm hoping to close a large deal an have around 50k in savings for a home so I was just wondering with that would there be anyway to go around those rules? Non traditional funding source? Portfolio lender?
There can be exceptions on the 2-year tax return requirement if you've been in school, so be sure to ask the lender you're working with if there's anything they can do.