My wife and I are in our early 50s, self-employed and seeking a mortgage lender who understands our non-traditional financial situation. We own several NNN properties and residential rental (STR & LTR) properties in 4 states. Each has very good cash flow. We have a healthy 401k, healthy bank accounts, very good credit scores and no personal debt. We sold our primary residence in Vero Beach, FL in 2020. Since then, we have been renting in different areas of Brevard County, FL to decide where our next residential purchase should be located. Our goal is to purchase a property that we can live in for a couple of years while making improvements, then turn into a STR. We now have a good idea of where we want to buy and are seeking a lender that has experience with customers like us. Our accountant of many years has worked with us to take advantage of all the tax benefits available to self-employed, real estate investors. So traditional mortgage lenders have been unable to work with us.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
4y
@Scott Trench can't do DSCR for an owner occupied purchase that they want. The Hoards would have to buy non owner, provide a lease, pay higher rate and larger down payment to make the purchase cash flow.
I translate your situation to: we do not show any net income on our IRS taxes, or it's a loss.
So my questions:
What do you show as total deposits into one account for the past year and two years excluding refunds? That can be used as income.
or
Is your middle FICO in the 700's? Do you have 30% cash in checking or savings accounts of the proposed property purchase? (So if you buy a $600000 house you need 20 or 25% down plus reserves to show)
Or do you have a huge 401k we can extrapolate income going forward the coming three years?
There are other products if you have other pieces is the answer.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
4y
@Scott Trench can't do DSCR for an owner occupied purchase that they want. The Hoards would have to buy non owner, provide a lease, pay higher rate and larger down payment to make the purchase cash flow.
I translate your situation to: we do not show any net income on our IRS taxes, or it's a loss.
So my questions:
What do you show as total deposits into one account for the past year and two years excluding refunds? That can be used as income.
or
Is your middle FICO in the 700's? Do you have 30% cash in checking or savings accounts of the proposed property purchase? (So if you buy a $600000 house you need 20 or 25% down plus reserves to show)
Or do you have a huge 401k we can extrapolate income going forward the coming three years?
There are other products if you have other pieces is the answer.
Lender · Nashville TN - Licensed in AL AR DC FL GA LA MD TN, TX and VA · Member since 2021 · 583 posts · 338 votes
4y
@Barrett Hoard - one option would be a bank statement loan, which is a non-qm loan option that derives your income from deposits in your bank account as opposed to your net income on your tax returns. Before going that route, I would push a little harder on the conventional mortage route, just because of the more favorable financing costs (both monthly and upfront). I'd be curious if your rental income from your other properties was considered to supplement your net-income from your self-employed jobs when the other lenders tried pre-qualifying you for a conventional mortgage.
Lender · Nationwide Lender · Member since 2015 · 1k+ posts · 814 votes
4y
@Barrett Hoard Not sure why everyone is jumping straight to Non-QM loan options. Nothing you stated would make me exclude conventional/Jumbo loan options, at least until I have reviewed all your tax returns. I can use all reported income, doesn't matter what form/source. If you have the NNN properties and rental properties are reported on your personal or business tax returns, it can be used.
I specialize in investors and self-employed. Creative tax strategies doesn't equal to being excluded from conventional financing. Sent you a DM. Lets speak.
Real Estate Broker · Charlotte, NC · Member since 2016 · 569 posts · 351 votes
4y
@Barrett Hoard, I closed 4 months ago on a 640K home with a conventional loan (3.5% down) as an self-employed Realtor. Sure I had a mortgage broker telling me that doesn't work but I found the right lender and worked with them for a couple of months until everything lined up and I had an underwriting approval before I submitted offers. You have the option of getting the maximum tax return for this year or having a 30-year mortgage with favorable rates.