1099 contractor - loan qualification

[Derek Buehner]

I'm trying to qualify for my first home that I will turn into a primary residence and rent the rooms out. As my first investment, I've determined this will be a great way to get started in the real estate world. I'm in the colo springs market and I'm having a little issue with getting approved. I'm trying to qualify for a 30 year conventional loan with 5% down. I've had an LLC business that I've held for the last 4 years or so. The LLC which I created for my side business has generated 20-30k in revenue over the last couple of years. In 2019 I worked a job as a w2 employee and my tax returns showed about 60k from that position. Now in 2020 and 2021, I'm with a different employer making much more but I'm paid as a 1099 contractor to my LLC. The problem I'm having is that the jump from the income shown on the LLC in 2019 is significantly less than what was paid to it in 2020 and skews the 2-year average needed. If the income I made in 2020 was in the form of a w2 or if in 2019 the w2 income was paid to the LLC, I wouldn't be having this issue. My lender explained that I have a few options, one is to wait until I can file 2021 taxes, and then the 2yr running average is adequate. The other being to bring in a co-borrower or cosigner. I'm trying to avoid those options if I can. I have a few ideas that pertain to restructuring how I was paid under my LLC. Any out-of-the-box ideas that don't raise any red flags or are unethical? I'm wondering if anyone has been in this position before and what advice you may have.