W-2 vs 1099

[David F.]

I've only in recent months decided to pursue real estate investing and I want to be maximally positioned as a credit-worthy borrower. I'm a physician and for the last 2 years I've worked as an independent contractor because it behooves me financially as I can demand more income and can stow away more money into my self-employment 401k. I make over $200K a year. However I understand that lending institutions typically favor w-2 full-time employment. Do you think that in my case this will make me a less attractive borrower? Do you think I'll still be able to borrow up to the same DTI limits that I would as a w-2 employee? If the above would make me a less attractive borrower, would becoming a full-time employee now right before applying for a mortgage help, or would it only help if that were the case over a couple of years? FYI, I literally can make twice the income as a 1099 than full-time, because many full-time positions limit my moonlighting abilities.

[Patrick Liska]

 I have been self employed for 30 years, no 1099 or W2 for me. some times you have to show more and explain more to the banks in order for them to understand. as self employed there are a lot more deductions you can take on your tax returns, therefor it will not show that you make as much, but yet you are deducting costs that others can't, so you need to show them that some times. also it is good if you go in to the loan officer with copies of recent checks,2 years tax returns, bank statements and even a list that shows your expenses and assets and gives them the total of your net worth. i walked into a meeting with a commercial loan officer at a bank with all that info in hand, without them asking, i gave it right to them at the start of the meeting, 5 min later they were asking me how much i wanted to borrow, they approved me right then and there. so just go prepared with what ever info you can gather.