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Self employed(1 year) mortgage approval

I'm self employed since Aug 2012. I have been working in the same line of work (software contractor). The source of income is same before my self-emplyment started and after self-employed. I was working for company X through company Y before my self-employment for 7 years with consistent income over 100k. Now I am still working for company Y directly through my own established company and the benefit I cut down one layer and so I am paid more now. I can provide proof for this and letter from company Y. Being independent contractor I don't have much expenses on my business. I have excellent credit scores above 775 and no debts.
This is my first home purchase. I already found and signed contract for 350k home and need to close in December 2013 and get pre-approval soon to prove to the builder I am credit worthy. I won't be having two years of tax filings but I can provide year to date income statement which shows health of my company. I have tried two lenders and they said they need 2 years tax filings minimum. Is there any lender who is willing to provide loan with my situation as is.

 
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July 26 2013 - Cary
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Profile picture for zuser20140603193358827
Sorry meant to post not answer to another question!
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June 03
Mullen (and other self-employed borrowers)....Completely understand your frustration.  However look at it the other side.  Whether you have been In your field for 1 month or 25 years, you have to recognize that owning your own business comes with its unique challenges.  Many people think that have it all figured out but then fail for various reasons.  To require that you have been self-employed for 2 years is really not that unreasonable.  Understand there are programs out there that if everything else is strong where only 1 year of tax returns are needed.   Hope that helps explain a lenders POV
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November 21 2013
Profile picture for mullendw
I am in the exact same boat.  It is ironic because I have an employee who could purchase a house based on the W2 he gets from me without 2 years history, but I as the owner cannot.  I also found out that I cannot refinance my current home loan from a fha to a conventional loan for the same reason even though my ownership exceeds the 20% requirement.  What stupid laws.  Not very favorable to "small business owners" which every politician loves to love.  
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November 21 2013
Profile picture for pako42
By supplying 12 to 24 months of bank statements that should take care of the tax issue as well as seeing your YTD  P&L. If you have a purchase in California contact me.
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November 15 2013
Bryan, Some things never change... You might consider not  being so short sighted and take a minute to set up an official profile.
And you should also note that this thread is a few months old. The poster is rounding the corner to filing a self employed tax return and then some ...that maybe takes the word "portfolio" out of the equation?
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November 15 2013

There are a few banks out there, such as my bank, that will give you a Portfolio loan, meaning they will lend their own money out to you. This would not be a Fannie/freddie (conventional) loan. 

You would need 20-25% down based on the home you are buying and a couple of other factors, as we only lend this money in the State of CA.

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November 15 2013
  • The borrower should have been self-employed for at least two years prior to the loan application. Personal and business tax returns should reflect increases in income and assets with likelihood for continued growth
  • A borrower who has been self-employed between one and two years must have at least two years of previous successful employment in the same occupation in order to be considered favorably
  • A borrower who has been self-employed for less than one year has not established a history of stable self-employment earnings and is generally not eligible for coverage
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July 27 2013
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July 26 2013
Barb gave you the answer......... this is an example for consumers and Agents to always get a pre approval prior to beginning the househunting process. Everyone's scenario/finances are different, and regardless of income or credit score there are still other apspects ie job history, assets, ratio's, debts, credit disputes etc that impact the mortgage approval process.
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July 26 2013
You will need 1 full year filed tax returns as self-employed. In your case, that means needing to file 2013 returns. Freddie will do 1 year self-employed. Possibly push the closing into January so you can file taxes.
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July 26 2013
Profile picture for iupswack
To further expand on what scott said, another major issue is that you don't have a full year of S/E history either.  Even if a lender could use 1 year of tax returns, they would reject in this scenerio since it is not a full year as they would not be able to accurately calculate the business income.
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July 26 2013
unfortunately it it not us lenders that make the decision it is fanne mae and freddie mac who are the investors that set the guidelines and they need to see 2-3 years of steady income and in your case, self employment income. to show stability.

We as lenders would love to close any loan and understand your situation but the investor that sets the guidelines does not and needs to see it on paper. Going from a W-2 employee to self emplyed you need to show 2 years of self employment income.

Hope that helps!
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July 26 2013
 
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