Seeking Advice - Conventional Financing for Self Employed

[Andrew Blanks]

I spoke with my lender last week and he told me that as of I believe June 4th or so, Fannie edited their guidelines and it is basically impossible for a self employed (no W2) person to get conventional financing right now. Even primary res. He’s been doing this 25 years and only ever given me excellent advice. I still found it hard to believe so I called up a random internet mortgage company. Aimloan.com. They said the same thing. They said the same thing. Spoke with a closing attorney who told me the same thing. Any thoughts on this? Has anyone out there who is completely self employed (no W2 income) closed a conventional mortgage with an application date after 6/4/20? Thanks in advance!

[Eric Veronica]

Ill push back on a couple things you said.  

Self employed W-2 income - Whether you are S-Corp self employed with a W-2, or without a W-2 there isnt much of a difference. If every year your business pays you a 100k W-2 and your business income breaks even then you as a borrower make 100k per year .  If your business pays you zero W-2 income but your business net income is 100k with a k-1 reflecting a 100k distribution then you still make 100k per year.  (assuming you own 100% of your s-corp)

Impossible to get loans as a self employed borrower - it is definitely more challenging to get a loan as a self employed borrower than is was 6 months ago however it is definitely not impossible.  If your self employed revenue and income has been negatively impacted by Covid-19 then it may be very challenging to get a loan.  If your business has not been negatively impacted by Covid-19 and you can prove this with a P&L and corresponding bank statements then I am not sure what the issue is.