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self-employed construction loans

Hello all.  Good site.  Good information.

I'm a home owner and self-employed.  We own 20 acres and a small New England cape in Vermont.  We are adding on a building that is nearly the same size as the original house to expand for an incoming family member, as well as expanding our living space. The addition will cost approx. $200k, and we have already started the construction - funding it ourselves.  We have put $35k into the foundation and first floor framing so far with a local builder working part-time.

 I've only been self-employed since Jan (7 months), but I'm in the same line of work that I was in while with my last employer.  I was in that job for 10 years.

Construction loans usually want to see 2 years of tax returns.  I can show that, but they are tax returns for when I was a W2 employee.  1099 makes this a challenge from what I have seen.

My income (to my company) is roughly $150k with 99% billable expenses.  My wife is self-employed at roughly $50k annually.  None of that matters much to underwriters.

Does anyone know of a program out there that may work for this scenario?

Thanks.

Mike
  • August 05 2010 - Barnard
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Answers (3)

Hi , I can help you with a 203K FHA but the aspects of this may be very complicated, you do not need W-2 or 1099 taxes, but will need to produce banks statements and may possibly need to have  a review done on your wifes and your current financials in what in accounting is called a proving a "going concern" the fees are not low and the headaches from this process are enormous, but if your score is high enough it is doable.

The other option is going back since you you began self employment and paying all the fees and penalties and redoing (ammended) your taxes so you are a W-2 borrower.


Hope this helps
  • August 21 2010
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I'm sorry to say that I dont know of anyone currently doing construction loans with less than two years' worth of self-employed history. 
I would have said to check with a local bank--but they have gotten so conservative, they want you to have the money and not need to borrow it, in order to obtain a loan.
I'd say get a cosigner, and look at an FHA 203K loan.  Otherwise, see if the loan can be done in the other person's name/income, since you said 'we'.  Also, if the incoming family member is old enough, you can possibly have their income counted as long as they are on the loan as well.
Just some ideas.  Banks are scared of Stated-Income loans, and self-employed people in general.
  • August 05 2010
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Start with your local bank and see what they can do about a construction loan. You can then refinance into permanent financing after the construction is finished and you have been self employed for long enough.
  • August 05 2010
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