Renovation funds or HELOC for self-employed

[Jeff M.]

Hoping someone has some ideas for lending as we’re at our wits end. I’ll try to keep this as concise as possible. I have been a self-employed web/app designer for 6 years and been in the same line of work for 20 years. My income is comprised of long and short contract assignments. Short assignments (1-2 months) pay as 1099 but longer contracts (3-6mo) typically pay as W2. At the end of the year, I have both 1099’s and W2s. I’ve maintained an average of $145k annually and have a credit score over 800.

When we were buying our home at the end of 2021, I had a problem because lenders wanted to see my last years tax return (2020). Since I’m self employed, they won’t count W2 as income as I have to file as Schedule C. Since my W2 income was not counted, lenders only saw me making around $40k and as a result, would not be able to help with a mortgage. Ultimately, we ended up having to pay all cash for the house to get us into the home.

The home is vacant and we're now ready for an extensive renovation. We looked into doing a HELOC to access the equity for the remodel but now that they are looking at my 2021 tax return, it's the same thing all over again. They won't include my W2 income, therefore, it looks like I made very little money.

My question is this: Are there any non-traditional lenders that offer decent interest rates for people in an odd tax situation?

I’ve called around and most just want me to apply and run me through their system. I want someone who will truly work with me and confident about loan approval. Rocket was a no-go, personal loans don’t offer enough and interest rates are too high. This is my 4th home/flip and the one I intend to keep for some time. I've never experienced anything like this... any insight greatly appreciated!