Real Estate Agent · Yonkers, NY · Member since 2016 · 32 posts · 8 votes
Hello Everyone,
Hope that everyone finds themselves Safe and Healthy.
I am interested in purchasing a Duplex. I will live in one apartment. and rent the second apartment.
However, I started my own business in January, and I do not have a 1099 form. I do have enough cash for a down payment, and I have excellent credit. My concern is, I am not sure what type of financing I can obtain without a 1099 form.
Does anyone have any suggestions, or worked with a bank, that would assist someone without a 1099?
You are doing a good job in preparing yourself @Joanne Santos: having good credit and saving for the downpayment. Keep it up. When ready, there are loans available for owner-occupied investment properties that have smaller down payment requirements and a portion of the rental income will be counted towards your income, which is good. But as being a self-employed person, it will be harder to verify your income and qualify for a loan. Banks don't like to take risks and have a track record of knowing what works. Research lender qualifications. I needed 2 years of tax returns to qualify. Anyway to find a partner? Someone with W2 income that could co-sign?
Meanwhile, your job is going to teach you about the market! Soak it up.
Doesn't hurt to start to get connected with a few different types of lenders to know what they need.
These are hard to find because many agents don't even know what it is but try asking around for a portfolio lender.
Check with a local credit union.
Connect with a Mortgage Banker
Lastly connect with a Mortgage Broker
Portfolio lenders keep the loans given out so they tend to have unique programs and access to an underwriter.
Mortgage bankers do traditional loans that anyone can access but mortgage bankers have access to an in house underwriter since they sell the loan after. Mortgage brokers simply broker the loan so their company never becomes the owner. They do not have direct access to underwriters but can potentially get best rates.
This task is hard to do but its well worth knowing one of each.
Try asking if they are a portfolio lender. if not then do they have an in house underwriter?
@Joanne Santos Would it be possible for you to partner up with a family member on an FHA loan to get the duplex? You would have a low down payment, and be able to subsidize your living expenses. Just a thought?
I will be renting the second apartment to my sister. I was thinking of asking her to partner up with me, since she is a W-2 employee. However, the downpayment will come from me, so I have to figure out how to handle the partnership part :)
@Joanne Santos, I have found that at the end of the day, banks can normally work with most any situation (particularly when you have assets and good credit score) but will price in the risk with a higher interest rate. This is not always true, but with smaller lenders that hold the loan on their books, there is a lot more flexibility.
I have also heard that Freddie Mac will lend on one year of self-employment/1099 income. I have not gone through the process but a mortgage broker was telling me they will.
At the end of the day, I agree with others. Just start calling around to various lenders. Generally, your smaller banks and credit unions will have more flexibility, as the larger banks will only want conforming loans they can sell to Fannie/Freddie. I would also try to find a local real estate investor club/meetup/facebook group for your local and ask other investors who they use. I have found that a lot of the investor friendly banks also tend to be better for outside-the-box owner occupied lending too.
Evan Polaski, Thank you for your feedback. It's great to get feedback on my question, greatly appreciate it.
I just joined a real estate investor club, and attended virtual meetups, I've learned a lot from them as well. I am meeting with a mortgage broker friend this weekend, and going to visit my credit union to see what information I can get from them.
I'm a researcher and determined :)
Hopefully, I can get lucky and find that duplex and have the seller consider seller financing. It won't hurt to ask.