Self employed, steps to get a loan?

6 Replies

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?

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

How do you pay yourself through your business? Depending on what you show in your tax returns/k1's you should be fine. I am a mortgage underwriter so if you have any questions I'll be happy to answer them. Thanks.

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.

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?

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.

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