Self employed, steps to get a loan?

Question

Hi BP! I have a few questions about mortgage financing so I can start working in the right direction to get a loan.

I'm self employed with an LLC business.  In order to get financing for my first house they require 2 years showing my income.  The thing is i'm pretty good at living cheaply, so I have reinvested all my money back into my business each year and don't show much income, but the company brings in a decent amount of money.  That being said I want to get a mortgage and buy a house now.

So did i screw myself now, and have to spend the next two years showing enough income before I can get a mortgage?

Since i'll be taking a bigger income out than I need, what would be the smartest place to put that money into while waiting to put it towards my house.  for example a roth or other investment account?

And about how much money would I have to show to get a mortgage for example a $300k house?

Darby Beenken · Answer

http://www.bankrate.com/finance/mortgages/how-the-...

Thanks for replies guys, I found this link that helped shine some light for me. I'll definitely take a look into portfolio loans as an option as well.

Darby Beenken · Answer

Yes multiple partners and any profits were reinvested and written off, and sorry for making it confusing i didn't mean to make it that way.  I'm still learning which forms are which, I have my accountant do most everything.

Wayne Brooks · Answer

So, since you're filing a 1065 you have multiple partners?  Also, all profits  pass through the LLC to you so....then there are no additional profits, or you're taking "liberal" write offs?  Or, am I missing something?

Darby Beenken · Answer

I'm an LLC Partnership and take member draws that are reported on our 1065.  Would it be better to switch to an s-corp and take out a salary and be paid as an employee?  Or would they be viewed the same to an underwriter.

Upen Patel · Answer

Given that you are not reporting income, you would have to go the non traditional route to get a loan now. You might qualify for a portfolio loan (where the bank holds the loan and does not resell it).

The LVT and rates for these are high.

Or you can wait for 2 years to be able to show income on your tax return.

PM me if you want to learn more about portfolio loan.

Upen Patel