topic Re: Requirements for 2nd Mortgage/House when Self Employed in Mortgage Loans

Requirements for 2nd Mortgage/House when Self Employed

TXPocohontas — Wed, 15 Sep 2021 05:33:54 GMT

I purchased our house in a small growing town back early 2020. I lost my job 10 days after closing due to the start of the pandemic. While on unemployment, hubby suggested I freelance free work for our side business which ended up being full time since I could not get a job. Unemployment ran out and I officially started working with hubby, then opened a second business. We are blessed that by helping others, we have had money flowing in. We are tired of our little town and want to move back to the West Coast. I have researched and it is actually cheaper (at least by the property taxes and utilities) to live there. We thought about renting out the current house, while buying another.

So since I have no official paycheck, how do I qualify income wise? Businesses are fully licensed, bonded and registered with state and business bank accounts too. Business has an Experian credit score of B. My credit score are mid 700's. Zero missed/late payments. I even pay extra towards principal each month. My credit cards get paid off each month. I can put a down payment of 20%. Current mortgage is an FHA loan with the down payment assist second mortgage due when I pay off 1st or sell the house.

Any mortgage professionals out there in Dallas, TX area?

Thanks in advance for your responses.

Re: Requirements for 2nd Mortgage/House when Self Employed

ShanetheMortgageMan — Wed, 15 Sep 2021 17:14:50 GMT

Self-employment needs at least 1 year in order to qualify, but most situations require 2 years. Income is traditionally calculated from your tax returns, but there are programs that will use bank statement deposits over a 12-24 month period (sometimes as little as 3 months in some situations).

It sounds like your self-employment begun in 2020, so how does your self-employment income on your 2020 tax returns look (sounds most likely it'd be a Schedule C/sole proprietorship)? Is your self-employment directly related to what you did for employment prior to that? If so, then that is a situation where just 1 year of self-employment can be found acceptable.

Re: Requirements for 2nd Mortgage/House when Self Employed

TXPocohontas — Thu, 16 Sep 2021 04:42:07 GMT

@ShanetheMortgageMan

Huby and I co-own a C Corp. Yes I have the background to correlate with the business. Last years business taxes were small because we officially started 8/2020 as a corporation. This year has been very lucrative for us, growing each month. We have a client that keeps us busy and the other business is slowly coming along. We should have well over $200k just on the main business by the end of the year. Operating expenses are low. And that is with keeping the taxman happy with his cut. So officially 13 months so far in the business. We are keeping in mind that we will have to put 20% down and have about 4 month reserves for both mortgages to show to close.