1099-R vs W-2 for Lenders

3 Replies

It is my understanding that financial institutions prefer to borrow to those with a W-2 showing solid income. I am about to retire from the military and will be receiving a 1099-R for my pension (I will also be self employed). 

My question is: In the absence of a W-2, do lenders consider (or even look at) 1099-R proceeds from a pension as favorable for lending?

To add context, I intend to borrow using portfolio loans under LLC's for rental properties. I understand that these loans will usually require me to sign for them personally. Yes.. I have read every comment on the internet regarding using a conventional loan then transferring to an LLC, but I am still not convinced that hiding from the possible due on sale clause is a smart move.

Thanks!

Originally posted by Account Closed:

It is my understanding that financial institutions prefer to borrow to those with a W-2 showing solid income. I am about to retire from the military and will be receiving a 1099-R for my pension (I will also be self employed). 

My question is: In the absence of a W-2, do lenders consider (or even look at) 1099-R proceeds from a pension as favorable for lending?

To add context, I intend to borrow using portfolio loans under LLC's for rental properties. I understand that these loans will usually require me to sign for them personally. Yes.. I have read every comment on the internet regarding using a conventional loan then transferring to an LLC, but I am still not convinced that hiding from the possible due on sale clause is a smart move.

Thanks!

 It's not really a matter of "liking" or not liking, it's a matter of stability. A brand new 1099 real estate agent lists his cousin's $5m house and nets $100k in commission for the year. That is his only sale, and he has no other employment. If you were lending your personal money, would you feel comfy doing so on the assumption that this agent with one sale under his belt will consistently make at least $100k/yr?

Anywho, rant aside, military retirement income counts at 100% of value from day 1. This is not self employment income. :)

Generally portfolio is more liberal than Agency, so even though the above is Fannie, I'd be shocked if a portfolio lender treated military pension as self employment, that would make zero sense. 

Account Closed Your 1099R should be great for getting a conventional loan.  If the portfolio lender is wanting you to personally guarantee, then your 1099R should work for that as well.  However, it will be harder to get that kind of loan without a track record.