When I talked to my bank's real estate loan officer, I found out that I need 2 years of income history in order to buy my own property, even if I wasn't using a loan.
Can someone go into greater detail of this for me and what methods can I use to buy property without that income history?
What does this part mean?
"even if I wasn't using a loan"
Would you be paying cash? If so , I can't imagine why anyone would care what your income status was.
I'm not entirely sure. I was rather confused by the whole issue so I might have gotten that part mixed up.
It may have been that only for a bank loan I'd need the 2 years of income history, but I thought she mentioned something about needing the history even if I wasn't getting a loan.
@Justin Foster - the income history would only be for the loan. If you are buying cash the bank would never be involved
That is good to hear. I must have gotten that part mixed up.
It might also be difficult though to invest for 2 years without any bank loans. Are there any ways around that?
If you are self employed you'll need two years of tax returns showing your income (from the same business activity) to get a loan. If you are employed and getting a W-2 from your employer then the requirements are a lot less stringent- they want you to have been in that job for a while, but not two years... I don't know those details as I've always been self employed, maybe someone else will chime in.
If you pay cash, you don't need anything, although most buyers will ask for POF (proof of funds) before signing a contract with you.
Are you saying they require two years of income history for your personal W2 income? If so, I'd talk to another bank as 2 years at a current job seems a little high for just verifying income. If you mean you need a 2 year history on your rental income before they will consider it as income, then yes this is allot more common with the big banks. The only way around that (for bank financing) is finding a bank who is a direct lender, usually a smaller community bank. A direct lender (portfolio lender) keeps the note on their books and doesn't have to comply with the standard Fannie guidelines as they will not be reselling the note.
I believe it was two years of W2 income history, but I don't think it had to be with just one job.
Probably worth noting is that it was a local bank that I went to rather than a national one.
For conventional financing 2 years on income W-2 or 1099 is usually required. They also want to see you have been in the same industry. I am in sales and have been doing it for 10 years - my current job is base + commission and my last job from 18 months ago as base + bonus and they could not count all my commission on my last deal because I did not have 2 years of receiving them. Even though I have been paid this way for 10 years.
Also, partnering with another investor who can sign on the loan may help. Local banks that don't sell to secondary market and keep loans in house may be able to work with you as well. Good Luck
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing