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Replies (22)
- CROLSE
- Contributions:5
No, an SBA loan can only be used for a for profit business. If used for real estate the real estate must be "owner occupied" meaning the "owner" which is the business must be occupying and using the majority of the house for business purposes.
- Eric Burgess, "EricBurgess"
- Contributions:24
Crolse is correct, additionally SBA loans also typically require some sort of collateral, such as a house to be secured when they are obtained for your business. Why wouldn't you consider a simple, purchase money mortgage to buy a house?
You would have to use hard money. You can't occupy a home with more than 25% of a business. I use to get DC loans and would have to turn them away because the homes had 1/3(first floor) was a store front. some how countrywide would get them thru though. I still don't know how they would get fannie Mae to buy the loans.
- Andrew Adams, "203K Specialist"
- Contributions:9349
You need to learn more about mixed use properties, they can be financed.
- Andrew Adams, "203K Specialist"
- Contributions:9349
FHA will do mixed use on multis based on the # of stories:
25% on a 4 story
33% on a 3 story
50% on a 2 story
I did a K loan 2 months ago.
25% on a 4 story
33% on a 3 story
50% on a 2 story
I did a K loan 2 months ago.
- carmen25
- Contributions:128
Im kind of confused :\
So I had asked if I can take out a loan on the business to buy a house...
The business is NOT home based. It is a big liquor store that is worth $600k. I do not own the real estate(building/land).
I want to buy a house which will be my primary residence/owner occupied.
It is 2 story.
What kind of loan, if any, can I get from the business to buy the house?
Reason I can't get a regular mortgage loan is because I have 1 year and 9 month employment history (self-employed). My 2007 tax return shows income under $5k because I was pregnant and had a baby and only worked from home.
I should add that I have not tried to get prequalified, so I have not been denied or anything. I am just assuming I will be denied because of the 2 year employment requirement.
Also, I have not filed my 2008 tax return yet (extension). So I just want to know if I CAN get qualified with 2008 tax return and year to date profit & loss 2009. Otherwise, I will be paying over $25k in taxes because I won't be taking some of the deductions that I otherwise am allowed to have.
I hope that made sense. Thank you.
So I had asked if I can take out a loan on the business to buy a house...
The business is NOT home based. It is a big liquor store that is worth $600k. I do not own the real estate(building/land).
I want to buy a house which will be my primary residence/owner occupied.
It is 2 story.
What kind of loan, if any, can I get from the business to buy the house?
Reason I can't get a regular mortgage loan is because I have 1 year and 9 month employment history (self-employed). My 2007 tax return shows income under $5k because I was pregnant and had a baby and only worked from home.
I should add that I have not tried to get prequalified, so I have not been denied or anything. I am just assuming I will be denied because of the 2 year employment requirement.
Also, I have not filed my 2008 tax return yet (extension). So I just want to know if I CAN get qualified with 2008 tax return and year to date profit & loss 2009. Otherwise, I will be paying over $25k in taxes because I won't be taking some of the deductions that I otherwise am allowed to have.
I hope that made sense. Thank you.
- Andrew Adams, "203K Specialist"
- Contributions:9349
1. You cannot use and SBA loan to buy a primary residence.
2. You need to sit with a loan officer that understands tax returns to determine what would be used for your income and based on that the Loan Officer will be able to tell you what you will qualify for.
3. You only need to have 6 months Self employed income on the previous years tax return sto include self employed income provided the self employment is the same line of work you were in prior to being self employed.
2. You need to sit with a loan officer that understands tax returns to determine what would be used for your income and based on that the Loan Officer will be able to tell you what you will qualify for.
3. You only need to have 6 months Self employed income on the previous years tax return sto include self employed income provided the self employment is the same line of work you were in prior to being self employed.
- carmen25
- Contributions:128
what are some of the deductions/expenses that are added back to the net profit?
Which line is used as the income?
The AGI (last line) on the 1040?
The Net profit line on Schedule C?
Which line is used as the income?
The AGI (last line) on the 1040?
The Net profit line on Schedule C?
andrew,
you didn't say if you table funded it or put it thru a bank. I know wellsfargo wouldn't take it. They were the ones that taught me the 25% rule.
you didn't say if you table funded it or put it thru a bank. I know wellsfargo wouldn't take it. They were the ones that taught me the 25% rule.
- Andrew Adams, "203K Specialist"
- Contributions:9349
This is a good place to start. Self Employed income Analysis
Phil,
Not sure what table funding or thru a bank matters. If an underwriter tells you no...do you assume they are right?
Phil,
Not sure what table funding or thru a bank matters. If an underwriter tells you no...do you assume they are right?
Andrew,I learned last month. wellsfargos contract underwriters make 900 per loan so a loan that is hard will get a decline so they can move on to the next easy loan. If I ever get a decline. I ask the manager to send the loan to a full time underwriter. They will give the loan the time that is needed to get it thru.
Since rates have dropped to 4.625% its going to get bad again with slow underwriting.
On table funding. the table funding lender can do what ever they want. the loan just gets package up and sold off most of the time in bulk. Some times the lender gets caught and has to buy the loan back but most often they aren't.
Just rescued a dog so I have to take him to the vet. If you know anyone that wants to adopt a really cool dog in Dallas. I have one here. Gets along great with small dogs , cats and large male and female dogs.
Take care, Philip
Since rates have dropped to 4.625% its going to get bad again with slow underwriting.
On table funding. the table funding lender can do what ever they want. the loan just gets package up and sold off most of the time in bulk. Some times the lender gets caught and has to buy the loan back but most often they aren't.
Just rescued a dog so I have to take him to the vet. If you know anyone that wants to adopt a really cool dog in Dallas. I have one here. Gets along great with small dogs , cats and large male and female dogs.
Take care, Philip
- Andrew Adams, "203K Specialist"
- Contributions:9349
Multi tasking!
- carmen25
- Contributions:128
Thank you Andrew that was very helpful.
Can you tell me # 17 on that form, which line on the Schedual C is that exactly?
So I wanted to know if 2008 tax return and 2009 year to date profit and loss are acceptable? Or is 2007 still required? (Self employed borrower).
Can you tell me # 17 on that form, which line on the Schedual C is that exactly?
So I wanted to know if 2008 tax return and 2009 year to date profit and loss are acceptable? Or is 2007 still required? (Self employed borrower).
- Andrew Adams, "203K Specialist"
- Contributions:9349
No.17 is basically the bottom line on schedule C. I can recall and do not have a schedule C in front of me with the exact line.
Needing YTD or 2 years will depend on the findings. Why not save yourself the headache and sit down with a qualified loan officer?
Needing YTD or 2 years will depend on the findings. Why not save yourself the headache and sit down with a qualified loan officer?
- carmen25
- Contributions:128
The bottom line on schedule C is the Net profit or loss. But that number was already factored in on the 1040.
Number 17 on the cash flow analysis form says "Nonrecurring Other (Income) Loss/Expenses" (+/-).
On my schedule C, I have line 6 that says "Other income"
I have line 27 that says "Other expenses"
So that is why I was not sure which one to use for #17.
Last night I used your form and did this for my 2007 tax return. I was able to add back about $10k back to the total income.
Another question: Do they ask for a business license or anything like that to verify that you are the business owner of the store? I've heard that they do and they don't.
Number 17 on the cash flow analysis form says "Nonrecurring Other (Income) Loss/Expenses" (+/-).
On my schedule C, I have line 6 that says "Other income"
I have line 27 that says "Other expenses"
So that is why I was not sure which one to use for #17.
Last night I used your form and did this for my 2007 tax return. I was able to add back about $10k back to the total income.
Another question: Do they ask for a business license or anything like that to verify that you are the business owner of the store? I've heard that they do and they don't.
- Andrew Adams, "203K Specialist"
- Contributions:9349
Carmen,
It depends on a number of different factors you will not know for sure until a Qualified loan officers reviews your income and submits your scenario for automated approval.
I would call the guy in yellow on the right if I was in Cali looking for solid advice.
It depends on a number of different factors you will not know for sure until a Qualified loan officers reviews your income and submits your scenario for automated approval.
I would call the guy in yellow on the right if I was in Cali looking for solid advice.
- Eric Burgess, "EricBurgess"
- Contributions:24
Carmen,
Gregorio Denny is a great contact for this type of information. Hopefully through all the posts, you will able to find your answer. You really should sit down with someone or call someone in your state to discuss how you might be able to qualify for a conventional or FHA mortgage to purchase a home. In your situation it sounds like SBA simply will not work. Self employment income can be difficult to calculate on your own unless you know exactly what you're looking for.
Good luck to you and your family.
Eric
Gregorio Denny is a great contact for this type of information. Hopefully through all the posts, you will able to find your answer. You really should sit down with someone or call someone in your state to discuss how you might be able to qualify for a conventional or FHA mortgage to purchase a home. In your situation it sounds like SBA simply will not work. Self employment income can be difficult to calculate on your own unless you know exactly what you're looking for.
Good luck to you and your family.
Eric
- mike kunz, "All Money Mortgage"
- Contributions:6
Hi Carmen:1st time I've looked at the Zillow blog. I've bee in residential lending originating now for too many years. Some one just needs to tell you the likehood of you you getting a residential loan with 1 years tax return showing the income level you need to qualify is slim to none.
The underwriting rules for self employed is 2 years tax retuns that are then validated by the lender by sending off a form to the IRS to verify these numbers match up to what you filed. The usable income that is determined through underwriting is typcially a 2 year average however if you have a downward trend in income or your income field/business is being affected by this economy, the underwriter/lender is going to take the most conservative approach in what qualifying income they will consider.
In the lending world, everyone is maintaining a very conservative approach to lending right now and there really is not a lot of options.
Your only options is to wait to purchase until you have a 2 full years of verifable tax return income or consider a loan program that will allow for a relative/co-borrower (not occupant) that has good income and credit and approach the lender of choice to see if they will consider.
Good Luck to you.
Mike
The underwriting rules for self employed is 2 years tax retuns that are then validated by the lender by sending off a form to the IRS to verify these numbers match up to what you filed. The usable income that is determined through underwriting is typcially a 2 year average however if you have a downward trend in income or your income field/business is being affected by this economy, the underwriter/lender is going to take the most conservative approach in what qualifying income they will consider.
In the lending world, everyone is maintaining a very conservative approach to lending right now and there really is not a lot of options.
Your only options is to wait to purchase until you have a 2 full years of verifable tax return income or consider a loan program that will allow for a relative/co-borrower (not occupant) that has good income and credit and approach the lender of choice to see if they will consider.
Good Luck to you.
Mike
- carmen25
- Contributions:128
Hi, thank you for all the responses.
I will be sending my documents soon to the REO bank that owns the property I am interested in, I've been told that it makes things easier for everybody if I just use the same bank that already has the house I want.
My situation is basically this:
*Excellent FICO score 763 low/ 768 high.
*Excellent credit report
*ZERO debt
*Never had a 30 day late.
*Verifiable bank accounts
*30% down on a $650k purchase(hopefully I can get it at this price:) )
*First time homebuyer
*Self employed business owner (liquor store)
*Verifiable tax returns
*Bought the business at the end of 2006. I remodeled, expanded and added new fixtures, etc in 2007. The 2007 tax returns (after adding back the allowable add backs) the total income is not that much. But the 2008 income would put me at 35% DTI. And I have 2009 year to date profit and loss, which shows increasing/stablized income. Everything is done by a CPA. If they want to verify with the CPA that's no problem.
So the only thing I'm iffy about is if they are going to base the income on the 2007 tax returns. Because the more accurate and true income is from 2008 until present day.
So based on the info I just gave you, do you believe I will run into any problems?
I post on here so I can get some feedback, so when I do send my application and docs for preapproval, +I know what I'm up against.
I will be sending my documents soon to the REO bank that owns the property I am interested in, I've been told that it makes things easier for everybody if I just use the same bank that already has the house I want.
My situation is basically this:
*Excellent FICO score 763 low/ 768 high.
*Excellent credit report
*ZERO debt
*Never had a 30 day late.
*Verifiable bank accounts
*30% down on a $650k purchase(hopefully I can get it at this price:) )
*First time homebuyer
*Self employed business owner (liquor store)
*Verifiable tax returns
*Bought the business at the end of 2006. I remodeled, expanded and added new fixtures, etc in 2007. The 2007 tax returns (after adding back the allowable add backs) the total income is not that much. But the 2008 income would put me at 35% DTI. And I have 2009 year to date profit and loss, which shows increasing/stablized income. Everything is done by a CPA. If they want to verify with the CPA that's no problem.
So the only thing I'm iffy about is if they are going to base the income on the 2007 tax returns. Because the more accurate and true income is from 2008 until present day.
So based on the info I just gave you, do you believe I will run into any problems?
I post on here so I can get some feedback, so when I do send my application and docs for preapproval, +I know what I'm up against.
- carmen25
- Contributions:128
Can I please get some insight on the post above (not the original post)?
- carmen25
- Contributions:128
What is #22 Amortization/Casualty Loss mean on the Cash Flow Analysis? What is casualty loss? Is that like bad checks that I recieved?
Also, for the allowable add backs, is there a maximum? Or do they add back all the depreciation and non cash expenses on the tax return? I have about $30,000.
Please advise!!!
Also, for the allowable add backs, is there a maximum? Or do they add back all the depreciation and non cash expenses on the tax return? I have about $30,000.
Please advise!!!
SBA Loan: Can it be used to buy a house?
My husband owns the business but not the real estate.
If he were to sell it today, it's worth $600k.
Need a loan for $400k.
Can a SBA Loan be taken out to buy a house?
Will this be considered an all cash offer for the house?
What are the guidelines for SBA to be eligible?
Thank you.
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