Profile picture for MikeB03

How is qualifying for self-employed and payroll/dividends handled?

Hi all, I am looking for some information and advice. I am looking to get an FHA loan for a home (due to Ch. 7 BK 34 months ago I can't get a conventional loan). We own our own business (50/50 share holders) however the loan will be just in my name). How is income calculated in a sitatation like this? We take payroll as a lump sum monthly (and do W-2s at the end of the year) and dividends throughout the year. Is this divided 50/50 since we are equal share owners or can it be divided 70/30 etc for example? For the payroll, if we took $40,000 total as payroll, can I say I made $30,000 and my husband $10,000? The home is a new build so it wouldn't be ready until next year which means we will use 2012 taxes and 2011 taxes for qualifying I am thinking. We would first need to get pre-qualifyed for the loan, is that the same process as getting the final loan and so, will they look at 2011 and 2010 plus P&L for 2012?
  • November 08 2012 - Phoenix
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Answers (6)

Are you currently working with a lender?  I have several that I have worked with over the years and I can send you their contact information.  
  • November 27 2012
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I am a loan officer and deal with this problem frequently.  If you pay yourself a w2 wage and it shows on your corp tax returns we can use that to qualify.  If you are receiving dividends and claim it you can use that as income averaged out over the twelve months.  I do loans 24 months from bk with 3.5% down and great rates.  Email or call me and i can either qualify you or go over any questions you might have.  Even if you decide to use someone else I have no problem answering any of your questions.  Yo should definitely be in a position to purchase!
  • November 09 2012
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Profile picture for BartGabe
Most banks have overlays in addition to the FHA or FREDDIE/FANNIE guidelines. Overlays at a lender are essentially additional requirements/guidelines that they stipulate and enforce. 
  • November 09 2012
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Profile picture for MikeB03
Hi Bart, I understood that it's 2 years from a Ch. 7 and 3 years from a foreclosure for an FHA loan. Are you certain on the 3 years?
  • November 09 2012
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Profile picture for BartGabe

You would need to wait 36 months in order to apply for a loan. Most if not all lenders have to wait 3 years from a CH 7 in order to do a FHA loan. Lenders will look at your net income on your tax returns for the past two years. (2010 - 2011) If self employed they will take the average. I lend in AZ so feel free to click on my profile to discuss any further mortgage/financing questions.
  • November 09 2012
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Profile picture for Outer Banks N C
You should present all that to a loan officer and see what they tell you.

Tim
  • November 09 2012
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