Home loan for self-employed?

Question

I asked this question earlier, but I didn't get any helpful answers, so I'm going to try again.  I'm self-employed and I make pretty good money, but when lenders look at my tax returns, they look at the net income after deductions -- not gross income, like they'd do for people who aren't self-employed.  Because I'm self-employed and work at home, I take tax deductions for almost all of my household expenses, so my income looks deceptively low on my tax returns -- too low to get a decent home loan.  

So what do I do?  Are there any options for me in getting a loan?  Are there any lenders who have loans specially tailored for self-employed people (such as no income verification or bank statement loans)?  If anyone knows of any, please let me know how to find them, or give me some links so that I can check them out on the internet.

Just for clarification -- I am NOT looking for a loan that's geared towards people with bad credit.  My credit is in the good to excellent range.  It's only my income that appears to be too low for a loan (simply because of tax deductions).

Travismay · Accepted Answer

One way that you can verify income in a more full manner is to provide the bank with audited financial statements from the business.  If you can show that the business is actually making money and performing well, and have outside help in verifying that, a bank will be more inclined to consider your request.

The audited financial statements can depict where the living expenses and business expenses overlap, and the lender can then see your debt to income ratio in an a more honest manner.

Genuine Guidance · Answer

I am self employed also, and had to jump through a million hoops last November to buy a house.

Unfortunately, for 2 years I had to forego a lot of deductions in order to get to the monthly amount I needed to get a mortgage.  

As a contractor, I wish they would have only looked at my 1099's, but they wanted to know what my net income was.  It sucked! LOL  

There aren't any no income verification or low doc/no doc loans anymore since the mortgage debacle.  I tried that since I had 20% to put down.  They still wanted to make sure I was financially solid.  

You may have to do like I did and plan two years ahead and take as few tax deductions as you can, and unfortunately, have a bigger tax bill.  They don't count the tax bill against you, just trying to pay as little tax as you can!  4 years ago, you would have had no problem getting a loan.  Unfortunately, not in todays financial climate.

Proud American · Answer

I think you actually answered you own question,..."my income looks deceptively low". Many self employed folks, take absolutely too many deductions, when it is to their advantage, but then whine about it when it goes against them. 

Maybe you should revist those deductions over the next couple of years so your "deceptively low income" looks a little better.

michaelloans · Answer

There are options we have for self employed borrowers to buy or refinance a home with lesser documentation needed. Feel free to contact me so I can share the right path with a solid solution to your new home goals.
michaelloans@yahoo.com

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Home loan for self-employed?

4 Answers