How can I still qualify for a FHA loan without direct deposit

Question

Hello Bigger pockets community ,

i am looking to see if someone can shed some light on the dilemma i currently have. I've been a business owner for 2 years 3 months. i set up my business as an S-Corp and the way i pay myself has been through checks on a weekly basis. I have a pre-approval through rocket mortgage but they require me to give them a bank statement. i have the funds for a down payment and closing costs i guess my only concern is how do i provide everything to the underwriting department is requiring of me ?

Robert Medina · Answer

@Sergey A. Petrov I have given my lender everything she have asked for during the entire process, that is why I have a pre-approval letter but i was only asking about the direct deposit because i started my business a little over two years ago and did not want it to be a problem. @Erik Estrada Can you recommend someone ? would really appreciate it

Erik Estrada · Answer

It seems like you would benefit from working with a mortgage broker instead of Rocket. They handle all the leg work for you. In terms of what you would need, typically:

2 years of tax returns for business and personal

2 most recent bank statements

P & L statement

Trevor Alexander · Answer

I didn't see this post before I responded. Most likely they are requesting your bank statements to verify funds to close. They determine your business income based on your previous two years tax filings.

Sergey A. Petrov · Answer

@Robert Medina - give your lender what they ask for without questioning the why. They will be looking at multiple things across your financials. If you start withholding records or asking why they want a particular thing every time they ask for it, you’ll get all sorts of red flags on your process

Trevor Alexander · Answer

Hi Robert -

I'd ditch Rocket Mortgage if I were you. You'll need to provide your bank statements to verify you have enough funds to close, and be ready to provide any documentation to source any large deposits on those bank statements, but you do NOT need to provide them to document self-employed income.

FHA loans require two years tax returns for self-employed income. You do not need to provide bank statements to verify your SE income - if they are requesting that, it's their own overlay they created. All lenders needed P&L's balance sheets, and business bank statements during Covid, but that regulation has been lifted.

The Underwriter could still request a P&L & Balance Sheet if your income declined, but should not be requesting business bank statements.

I'd search for another Lender that has no overlays.

Robert Medina · Answer

when i file my company taxes it reflects the amount that the company pays me but i guess my question is as far as the paperwork the underwriting departments requires to actually give me the loan. Do they request the bank statements to verify that i have the money for the down payment ? or is it to verify that i get paid on a weekly basis.

Jeff Copeland · Answer

Presumably, you deposit the checks, right? If so, they'll show up on your bank statements and I don't understand why this would be an issue.

(I'm not saying you were, but...) If you were somehow trying to hide the income to avoid paying taxes, it likely won't be counted as income for underwriting purposes, especially since they will verify it with IRS tax transcripts. You can't have it both ways.