FHA self employed and frustrated

[Anonymous]

OK I wanna give a run down of my situation. I am a self employed chiropractor who has my own practice with my brother. I have been doing it for 5 years and am now very successful. I recently opened on my own practice in 2013 and in 2014 my brother joined as a partner. I have a few things preventing me from getting anywhere witb a mortgage especially an FHA and it really annoys me. I have found the perfect house and I am so upset to think it may be gone before I can qualify for a mortgage. Here are my issues:

1) My "income" looks small on my last 2 years tax return a because I had a lot of write offs from opening the business. Last two years average was around 20k. Even thoigh my business made around 120k I clearly made much more but had a lot to purchase and this year I should clear nearly 150k myself with a net take home anywhere from 60 to 80k after expenses and taxes. (I think but couod be wrong as i didnt realize how much you can seriously write off. But the trade off is get screwed in paying a ton of taxes just to show more income?) But I am told that any recent bank statements and such from my business are meaningless and I may have to wait til April to use this return to show more income. My mother who makes 90k is willing to cosign but we will touch on that soon...
2) Because my brother joined the practice in 2014 I am told that this is now a "new business" and that my 2013 return cannot be used regardless. So I have to wait until my 2015 return is filed. What I don't get is they don't care what the business income is because they only take my income from my personal return but why do they care if my brother joined the business???
3) So even if I get through the previous issue my mother cosigned a private student loan with discover for my sister in which ended up as a "charge off" since she couldn't pay. If you Google discover student loan lawsuit you will see why thus happened. They wanted her to pay 900 a month on a 15k loan when she just got out of school and would not work with her. This happened in November 2013. I was told by a local mortgage guy here that she cannot be a cosigner because of the charge off on an FHA or conventional mortgage. However, my sister closed on a house YESTERDAY with an FHA mortgage thru quicken and she said they saw the charge off but didn't need anything about it. Why is it now my mother cannot qualify???

Quick financial profile
My credit is 702 but I recently paid off a few credit cards so i expect that to rise.
I have a lot of student loan debt but due to IBR I pay ~500 a month of my student loans. Car payment of 390. Three credit cards with around 9k balance total and payments of around 120 bucks a month added together.
I have 65k in the bank and willing to put down anywhere from 3-10% on a house that's 130k. Wanting to go with FHA if possible but understand if I can't I'd at least want something!

My mom is 90k salary but credit is 642 with that charge off but that is it. She has around 1000 a month in expenses. She doesn't have a mortgage in her name as it is only in my dads.

Do I have any hope? Why do they hate self employed? Are their any lenders willing to work with me and my situation? Quicken told me to shove it and it looks like I may with this other local lender too.

[CH-7-Mission-Accomplished]

Your problem is what is showing for taxable income after business expenses.   This is a problem for a lot of people, but you simply cannot get around it.  You have to show enough income that is taxable to you personally to support the loan request and your other debts.

The issue with your brother joining the business is a nonissue.  Sounds like they are trying to blow you off and piling on.

I didn't think that mortgage lenders would allow for co-signors or anyone not actually living in the home and on title.  I may be mistaken.

If your tax returns' two year average is 20K income, that's what will be considered, end of story.  Sorry.

[StartingOver10]

FHA works for W-2 type workers, not so much for self employed.  Plus IME Quicken does not handle self-employed well at all so I am not surprised you have had a difficult time with them. If they had good telephone reps they could have advised you in the first 5 minutes that $20k won't support a mortgage payment.    Also, big box banks are very conservative. You might be able to work with a small regional type bank, but really your best best is to make application with a correspondent lender/mortgage banker. Make sure to discuss your self employment income first with the LO to find out what programs that mortgage banker has available to the self employed borrower.

You do have an issue because if your income is showing $20k after deductions, there isn't enough income to support a mortgage using FHA standards.

However, there are loans that are readily available for your situation. The most common type is a 'bank statement' type loan. You will need to put more down than for an FHA loan, but you don't have the associated income issues.  

I will pm to you a couple of excellent LO's that can help you.  

I suggest you pull the 3B report here so you know your mid-mortgage score not your FICO 8 score so when you speak to the LO's you can give accurate information regarding your credit score without having to have your credit pulled until you make a lender choice. 

It would be best to get the mortgage on your own and not involve your Mother if at all possible. In your discussions with either of these LO's they will be able to advise the best route to help you given your situation.