getting approved for conventional loan as contract worker

[Thomasina Pearce]

Hi BP family! Are there any investors whose primary source of income is 1099 or other contract work? If so, any tips on how to appear as stronger candidate for conventional loan? Especially if your income fluctuates monthly based on # of contracts. Thank you! :)

[Nick Belsky]

Originally posted by @Thomasina Pearce:

Hi BP family! Are there any investors whose primary source of income is 1099 or other contract work? If so, any tips on how to appear as stronger candidate for conventional loan? Especially if your income fluctuates monthly based on # of contracts. Thank you! :)

As a lender, I can tell you the biggest hurdles you will face as a 1099 Employee or Self-Employed is having 2 years of consistent history and having your income calculated properly. You will take a small hit on rate being non-W2, but great rates in conventional lending are still available to you! Bank Statement loans is another way to qualify. Essentially, the lender will look at your history, usually over 2 years, and be able to calculate what your monthly income is that can be used to qualify your DTI.

Many lenders out there won't deal with 1099 or SE because it can be a headache to figure this out accurately.  As a business owner, we try to make our income look like less so we have less tax liability.  When trying to get a mortgage it hurts you unless you have a lender who is familiar with your income type and knows how to properly calculate it.  Time and consistency are going to be your best friends when it comes to qualifying for a mortgage.  

Best of luck!

Nick Belsky