Self employed and trying to get a loan

[Nate Truxel]

I am currently self employed since March 2020. After trying to get a mortgage to purchase a house for myself I was told mortgage companies won’t approve me until I have been self employed for 2 years. I am wanting to start using the brrrr method to acquire rentals and I want to know if I get a hard money loan to purchase the house and complete rehab will the bank refinance into a traditional mortgage even if it’s before my 2 year self employment mark?

[Michael Glist]

So you will still need to show the 2 year history being self employed and they will likely also require that you have 2 years of rental history in order to use any rental income when qualifying for the loan. if you do not have the 2 years rental history than you would have to make enough to cover all your normal debts on top of the new rental loan. This can be tough when self employed since most self employed people will write off as much as they can to lower their out of pocket taxes at the end of the year. 

You can however use a Hard Money Lender or a NON-QM Lender to start off. They will qualify you based on the property and its ability to make money vs you and your ability to cover the mortgage. The rates are a little higher but this is a great way to start and then when you have the 2 years self employed history as well as 2 year rental income history you can always refinance into a conventional loan. 

I hope this makes sense if not feel free to reach out and I would be happy to help walk you through it. 

Best of luck!