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Self-Employed Looking for Lending Information
Hello all,
My wife and I are looking to purchase a house-hack in the southern New Hampshire area. My question is in regard to getting funding for a loan due to my income. My wife has a W2 income. For myself, I own an e-commerce business so I am self-employed. I started the business in late 2022, so only have about 2 months from that year on my 2022 tax return, then have a tax return for all of 2023. I know lenders typically look for 2 years of tax returns for self-employed income. Would lenders approve us for a loan for a house-hack even though I don't have 2 full years of income on tax returns? The other note is that in 2024, my income from the business really sky-rocketed, 3-4x what it was in 2023. But, would my 2024 income even be considered towards pre-approval given it is not on a tax return yet? Any information/suggestions anyone can provide is greatly appreciated!
Broker here. Sounds cliche but always best to reach out to a trustworthy loan officer and fill out an application because there are too many things to look at before determining how much you can qualify for.
If you are going conventional, they will need 2 years of tax returns, no way around it.
We will use your "net income" after all deductions for 2022+2023 and divide over 24 months. We are able to add some of the expenses back to your income.
If that is not enough, we can do non conventional (Non QM), and once you establish 2 years anniversary as self employed, we can use 12 months of bank statements. Will average all deposits over last 12 months to calculate monthly income, and then depending on the type of business, apply an expense ratio.
With non QM, lowest downpayment is 10% but you will be hit with a high rate. Best is 20% down.
Hey Nick! Congrats on trying to find a place in Southern NH. You definitely have options. I would probably see what you qualify for with just your wife's W2 income. Although it might not be very much, that will likely be the best loan terms you can find.
Past that I would consider a DSCR loan that would just care about the property and its rent and not so much that you are self employed.
Quote from @Nick Parenti:
Hello all,
My wife and I are looking to purchase a house-hack in the southern New Hampshire area. My question is in regard to getting funding for a loan due to my income. My wife has a W2 income. For myself, I own an e-commerce business so I am self-employed. I started the business in late 2022, so only have about 2 months from that year on my 2022 tax return, then have a tax return for all of 2023. I know lenders typically look for 2 years of tax returns for self-employed income. Would lenders approve us for a loan for a house-hack even though I don't have 2 full years of income on tax returns? The other note is that in 2024, my income from the business really sky-rocketed, 3-4x what it was in 2023. But, would my 2024 income even be considered towards pre-approval given it is not on a tax return yet? Any information/suggestions anyone can provide is greatly appreciated!
Nick, You're probably looking for a Non-QM bank statement loan; the interest is slightly higher but will get you into the house. Once you have your 2024 tax return, you can refinance to a regular conventional loan. Feel free to reach out if you have any questions
Hey Nick, yep already said but if you can't qualify based on your wife's income alone then a bank statement program is the most common for business owners when the taxes might not average what they're looking for. We would average deposits over 12 months and take a % of that to consider towards additional income. Feel free to reach out if you have any questions on that!
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Quote from @Nick Parenti:
Hello all,
My wife and I are looking to purchase a house-hack in the southern New Hampshire area. My question is in regard to getting funding for a loan due to my income. My wife has a W2 income. For myself, I own an e-commerce business so I am self-employed. I started the business in late 2022, so only have about 2 months from that year on my 2022 tax return, then have a tax return for all of 2023. I know lenders typically look for 2 years of tax returns for self-employed income. Would lenders approve us for a loan for a house-hack even though I don't have 2 full years of income on tax returns? The other note is that in 2024, my income from the business really sky-rocketed, 3-4x what it was in 2023. But, would my 2024 income even be considered towards pre-approval given it is not on a tax return yet? Any information/suggestions anyone can provide is greatly appreciated!
As has already been said, if you can't qualify with just your wife's income you can switch to a non-qm bank statement program. I have an in-house option (meaning we underwrite, close and fund it ourselves) with 15% down.
@Nick Parenti= thanks ...unlikely able to use any 2024 income ....there used to a way to use one year of tax returns for determining qualifying income ...proceed with the pre approval to find out what your lender is able to get approved for you
Quote from @Nick Parenti:
Hello all,
My wife and I are looking to purchase a house-hack in the southern New Hampshire area. My question is in regard to getting funding for a loan due to my income. My wife has a W2 income. For myself, I own an e-commerce business so I am self-employed. I started the business in late 2022, so only have about 2 months from that year on my 2022 tax return, then have a tax return for all of 2023. I know lenders typically look for 2 years of tax returns for self-employed income. Would lenders approve us for a loan for a house-hack even though I don't have 2 full years of income on tax returns? The other note is that in 2024, my income from the business really sky-rocketed, 3-4x what it was in 2023. But, would my 2024 income even be considered towards pre-approval given it is not on a tax return yet? Any information/suggestions anyone can provide is greatly appreciated!