questions on conventional financing qualification

3 Replies

I have a few questions about qualifying as an individual for an owner occupied sfh with conventional financing. these will be specific to a newly divorced woman applying for the first time on her own. 1) is w2 income received from an llc s-corp business owned by the applicant treated any differently then w2 income received from an unrelated employer? would this even need to be disclosed? 2) for purposes of dti ratios, is only the current rate of pay considered, or is an average of the last two years w2 income used? 3) can a two-year guaranteed-compensation employment contract be presented in lieu of the typical requirement of two years employment history? if so, would it be disallowed if the applicant were the signing officer for the corporation? thank you!

1) No for Q1. Would this even need to be disclosed? If you don't want to use that income no but if you showing loss and bringing in your 1040 yes the UW will hit your DTI for loss.

2) Salary will consider with current pay stubs.

3)No, if that contract is coming from your self-employed business unless you have history of receiving from that business.

Thanks, @Brie Schmidt .

Hi @Tracey Hamilton , W-2 is not a magic word like that. It's self employment income no matter how you spin it. If you put $10k more on your W2 and $10k less kept in the business, it's a wash, unless of course it disrupts the 2 year stability of how the business operates, in which case assume more conservative math will be used and in retrospect you'd have screwed yourself by trying to get clever.

Best things for self employed people...

1) Make more money.

2) Report what you make. All of it. Consistently. 

3) Don't get fancy with your taxes; assume a business tax restructure might reset your 2 years (sometimes it doesn't).

4) Make more money.

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