cancel
Showing results for 
Search instead for 
Did you mean: 

Requirements for 2nd Mortgage/House when Self Employed

TXPocohontas
New Contributor

Requirements for 2nd Mortgage/House when Self Employed

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.

Starting Fico 8 Score: 469 TU 501 EQ 453 EX
Current Score: 750 TU 755 EQ 694 EX
Goal Score: 820 Across the board
 
Message 1 of 3
2 REPLIES 2
ShanetheMortgageMan
Super Contributor

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

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.  

Helping people with mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 2 of 3
TXPocohontas
New Contributor

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

@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.

Starting Fico 8 Score: 469 TU 501 EQ 453 EX
Current Score: 750 TU 755 EQ 694 EX
Goal Score: 820 Across the board
 
Message 3 of 3
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.