Lending for business owners

2 Replies

I started a business as soon as I got out of college 3 years ago. Year 1 we took a loss. Year 2 we broke even. Year 3 we did very well netting over 40k According to my tax returns my business hasn't been the most profitable, but I've personally been able to accumulate a nice savings account. I'm 100% sure I can afford a mortgage or rental property but it doesn't seem like mortgage lenders are willing to take the risk because all of my income is based out of my LLC. Is there any type of special lenders I should be looking to for self employed buyers? Am I jumping the gun and should wait a little longer to establish more tax history? Currently I am paying myself directly from the business so I'm looking to put myself on payroll this upcoming year to simplify my tax structure. Any good suggestions on the neat tax structure to show personal income for a mortgage?

@Vincent Harper if you don't qualify based on your income I would reach out to a broker that is approved with many different lenders.  I would first try to qualify with bank statements and if that does not work there are lenders out there that will qualify you on the properties debt service

Originally posted by @Vincent Harper :

I started a business as soon as I got out of college 3 years ago. Year 1 we took a loss. Year 2 we broke even. Year 3 we did very well netting over 40k According to my tax returns my business hasn't been the most profitable, but I've personally been able to accumulate a nice savings account. I'm 100% sure I can afford a mortgage or rental property but it doesn't seem like mortgage lenders are willing to take the risk because all of my income is based out of my LLC. Is there any type of special lenders I should be looking to for self employed buyers? Am I jumping the gun and should wait a little longer to establish more tax history? Currently I am paying myself directly from the business so I'm looking to put myself on payroll this upcoming year to simplify my tax structure. Any good suggestions on the neat tax structure to show personal income for a mortgage?

 It's December, and it sounds like you're closing out a killer 2019 for your business. 

You don't have to wait until April 2020 to do your 2019 taxes. Do them ASAP (late January), try at that point. When your 2019 taxes are in & processed by the IRS, your income calculation will be based on either 2019/2018 average, or just 2019, but either way 2017 will be completely disregarded as a data point.

No reason to bark up the HML or non-qm trees when you can just wait a month or two, the benefits of the "Great Deal" you are looking at in terms of getting 7% off fair market value, or another $150/mo in cashflow from that, will be FAR outweighed by the rate/points/fees/etc that come with a HML or non-qm.