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Wednesday, December 1, 2010

Phone call questions I got today: Can you get me a mortgage? I'm self employed

One or two years of tax returns will determine income for the self employed borrower (one year of taxes are needed with excellent credit for Conventional Loan Financing and two years of taxes are needed for FHA financing).

Good to excellent credit is a must, and it doesn't help to get the borrower "more easily qualified".  Because the maximum Automated Underwriting debt to income ratios are presently set at 45% (max.) for Conventional and 55% (max.) for FHA, if the borrower doesn't have the income, the approval will not be possible.

There is going to be a trade-off between income tax paid and ability to get an approved Mortgage loan when tax time comes.

NOT having to pay taxes because the self employed borrower has a great Tax Accountant who shelters the income with expenses and write-offs so the borrower has a small tax liability, may in fact backfire when the same borrower tries to qualify for Mortgage financing.

If you need some direction about how you should file your taxes in 2010 (for your 2009 income) so that you have the ability to obtain the mortgage financing you would need, call me and we can review your options.

With an In-House Underwriter (Jenette sits in my office across the hall from me), she can give us insights into tax liability and taxable income strategies to maximize your opportunities.