Will documentation issue for S-corp prevent us from getting loan?

[Sharon D.]

We're getting ready to make an offer on a property that will become our personal residence and have a couple of questions for mortgage pros.

Background: we are both employed through an S-corp that we set up at the end of 2018 and own 100%. Prior to forming the S-corp, my husband was a 1099 contractor in the same field with the same contracts.

The catch: the IRS bungled our original S-corp election and we are in the process of attempting to resolve this with them.  They currently have us down as a C-corp but (upon the advice of an IRS rep) we are continuing to file as an S-corp while we wait for them to make a determination regarding our corporate status.  Why this matters: we are unable to get transcripts of our corporate tax returns until this is all sorted out.

Question #1.  Will our inability to get transcripts of our corporate returns prevent us from getting a mortgage?  We can of course provide copies of the returns we submitted, plus any other documentation requested (bank statements?)  And we shouldn't have any problems getting transcripts of our personal returns.

Question #2. My husband cut way back on work last year in order to focus on finishing his MBA (graduated Jan 2020). As a result, our income took a huge dip. Something like $100k in 2018, $40k in 2019, and (projected) $100k in 2020. How will banks calculate our income? Will they be conservative and use our last tax return to calculate DTI? Will they average the last couple of years together? Will they take increased income YTD in 2020 into account?

We are hoping to get a rough idea how these two issues will affect our ability to get a loan before we make an offer. We're talking to a sweet old lady who is selling her childhood home FSBO--don't want to waste her time and tie up her property by making an offer only to have financing fall through.

Thanks for any insight you can offer!