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Side Business losses and Mortgage loans

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Anonymous
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Side Business losses and Mortgage loans

Hello, I am in the process of getting approved for a mortgage, but have ran into a little snag.  

 

Here is my current situation:

Mortgage credit scores: 750, 756, 754

2015 to date income : 190,559 (should clear 220k this year, this is 100% W-2 income)

Mortgage type : 80/15/5

Price of home: 450,000

 

Here is the kicker.  I have a couple of side businesses that I have taken tax losses in (2014 tax returns).  Insurance business mostly (lead purchases, advertising, travel, etc.).  When the Company A LO started my file it was in May 2015, where my W-2 income really hadn't collected like you see above, but you could still figure the kind of income I would have made in 2015 based on the paystubs at the time.  So instead of doing the 2015 income, he used my 2014 income (170k, 100% W-2).  But he had to add in the losses from the business which was roughly 2500 per month.  You take the 170k over 12 months and you get 14,166 per month.. minus the losses of 2500 and now I am down to 11k per month.  Still great money, but the DTI calculation prevents me from getting approved for the loan.  

 

So, I shopped around.  I did find a lender (Company B) who said he could indeed get me financed on a 80/15/5 loan for the loan amount requested, but company A continues to tell me that company B can't get it done because of the losses.  The house won't be completed (its a new build) until Feb 2016.  So the game plan is to file taxes as soon as I can in Jan ‘16, in order to clear the losses of the side businesses. So I at least have a plan.

 

The question is, which lender is telling the truth?  Has anyone had an experience like this before? If so, how did you handle the situation?  

 

A few additional points.  Company A is the builder's lender.  I would also point out that I get incredile incentives for going with the the builder's lender (pays up to 11k in closing costs as well as paying for the owner title policy).  Company B is willing to match the builder's incentives, albeit with a much higher interest rate.

 

Sorry for the long post, but I wanted to give as many details as possible in order to give you guys some clarity.

 

Thanks

Message 1 of 3
2 REPLIES 2
ezdriver
Senior Contributor

Re: Side Business losses and Mortgage loans

If you reported losses, which in turn reduced your taxable income, it makes sense what the first lender told you. That said, there are lenders with special programs that only you and they can determine if workable for you. I don't think that anyone is lying to you. 

Message 2 of 3
StartingOver10
Moderator Emerita

Re: Side Business losses and Mortgage loans

Agree with EZ. Look for lenders that have a 'bank statement' program or portfolio program.

Message 3 of 3
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