How can I become approved for a loan?

[Michael Macaluso]

Hey everyone!

I’ve hit a bump in the road on my goal to my first property. I’m having trouble figuring out how to become approved for a loan. My current situation is I’m a bartender who makes 45-50k a year roughly. I hear lenders usually look for 2 years of W-2s.

My problem is on my last W-2 I was claimed of making 20k. My plan was to claim my full amount this year of 50k. The lender told me he would take both years and combine them which would put me around 35k. Which leaves me with low buying power for my first deal and about 6k in tax returns I would have to pay.

I have an idea to talk to my boss about changing my job title to an assistant manager which then the salary could be used immediately. But that’s about all I could come up with.

My question is, is there a better way to become approved for a conventional loan?

Thank you!

[Dan Weber]

@Michael Macaluso For this first property purchase you could try to partner with someone who has a stable w-2 income. By the time you go to buy your second property hopefully your personal w-2 situation will be figured out.

[Fasil Khan]

@Michael Macaluso What state are you in? Possibly Co-signer (s) and/or depending where you live there are grants in NJ for 5,000k to 40,000 to assist with downpayment and closings.

[Steven McCutcheon]

@Michael Macaluso

I know that life all too well coming from the Bar business originally. There are options to work with though! You can look into grants, FHA loans depending if you wanna live there for a year, partner with someone, or have a co-signer. These are the most popular I've seen, but definitely consult with some mortgage professionals to see what they say!

Best,

Steve

[Christopher Beahm]

Hi Michael, 

Ask you lender to submit your automated underwriting findings to Freddie Mac rather than Fannie Mae. Lots of times Freddie will approve the file only asking for 1 year returns rather the 2. 

I'm happy to help if you have further questions. 

Best of luck! 

[David Hooper]

If you make more than what's indicated by W-2's and tax returns, you could look at a bank statement loan. These are non-QM / portfolio style loans and you basically turn in 24 months of bank statements to have your cash flow analyzed. A team of special underwriters reviews and gives you an income number to fit the debt-to-income ratio requirements of the loan. A big challenge with this type of deal is that you have to put probably 20% down and interest rates are almost as high as hard money. 

If you're looking at an investment property, another option is to take a look the debt-service coverage ratio loans. You take your assessed rental income (via either in-place lease or rental addendum to an appraisal), knock off 5% for vacancy. Then if the remaining income covers your PITI+A (principal, interest, taxes, insurance, and any recurring items like HOA), then the loan is approved without reviewing your personal income situation (tax returns or W-2s). Still need at least 20% down and interest rates are better than bank statement, but we're not talking about an FHA deal at 4.5%.

DM or text me if I can answer questions about those in greater detail for you. :) 

[Mark Pedroza]

If your here in CA @Michael Macaluso maybe @Chris Mason can chime in..

[Eric Veronica]

@Michael Macaluso it is really hard to know how to get you to “approved” without knowing anything about your current liabilities and current housing expense.  Is your lender using proposed rental income from the property you are purchasing? Often times this proposed rental income can not only offset the entire mortgage payment but also give you extra qualifying income  

 If you have a low monthly debt load and your lender is using proposed rental income then it may possible to qualify even with only 20k per year on paper. 

Good luck!