Self-employed--how to qualify for a mortgage?

My husband has excellent credit score (816) and has never file bankruptcy, never had debt nor has made late payments on any of our bills. He's been self-employed for 13 longs years. We have a good $62,000+ in liquid assets (savings, checking, mutual funds, stocks, etc...). We applied for a loan last week because we've been preparing for this moment for a loooong time, and we have finally decided to take the plunge to buy our very first home (a townhouse in Maryland). Basing on the current interest rates and the amount of the house we're planning on purchasing, our would-be monthly mortgage would even be less than what we're paying for now on rent (which we have never been late on either). This morning, we received a very disappointing news from the lender saying that we do not qualify for the loan. We've been more responsible than the majority of the population who are buying a house now. Just because my husband has a Form 1044 instead of W-2, he was denied. All of the assets and excellent credit standing have been set aside. Is it fair?--NO!!

So, we're now beginning to wonder how we could ever qualify for a loan? My husband is not willing to give up his own small business and change his lifestyle to be able to get a W-2 and own a home. But it's very discouraging. Can someone shed us some light on this? Is there a particular lender that's liscenced in the state of Maryland to work with Self-Employed borrowers?

Update:

Being self-employed means you can write off a lot of your properties that you use towards your business. Obviously, the deductions make him look like he's not earning enough even if we still have enough left after all our monthly bills and rent. We were told that it depends on the lender who's willing to give work with self-employed borrowers.

9 Answers

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  • 1 decade ago
    Best Answer

    All banks are being tight on approving mortgages - period. Just because one bank turned you down doesn't mean they all will. Keep trying.

  • 1 decade ago

    The problem is not you being self employed and I commend you on being diligent on making sure your bills are paid. The problem that I see with most self employed borrowers is that you might make 62k+ a year but how many write offs does your husband have. That makes your income go down. Most self employed people write off everything so that they don't have to pay a high tax. Then when you go to buy a home you show less income then you actually make and you don't qualify because your income is low. I hope that helps. I know because I have been in real estate since 2004...

  • 1 decade ago

    You cannot have it both ways. Either you make enough money to buy a house (AND you tell the IRS that you make enough money) - or you don't make enough (or you tell the IRS that you don't make enough).

    Due to the current "mortgage crisis", lenders have done away with loans that require no income verification - often called loans for the self employed.

    I guess it's a financial decision to make - do you pay more taxes, or claim more deductions and not qualify for loans.

  • 1 decade ago

    Mortgage loan is a term used for the loans secured by a property. Mortgage loans refer to a loan secured by residential property, often for the purpose of securing real estate. Mortgage loans are priced lower than other loan structures because the value of the property risk for the lender.

    http://www.worldbestloans.com/Mortgage%20Loan.htm

    A fixed rate mortgage loan has its own benefit. If the borrower is budget conscious, he will remain at peace because the monthly mortgage amount will not change.Fixed rate mortgage loan is a loan where the interest rate remains the same through the term of the loan. Fixed rate mortgage loans are the most traditional form of loan.

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  • dog ma
    Lv 7
    1 decade ago

    Find yourselves a mortgage broker - your real estate agent can refer you to one who will work with people in your situation. A regular bank or mortgage company may not offer the type of program that you need. A good mortgage broker has access to many different wholesale lenders - one of them will have a program that works for you.

    Good luck!

    Source(s): 20 year real estate agent, 7 year mortgage broker
  • Anonymous
    1 decade ago

    he needs to show enough net inocme on his schedule C/1040 for the last 2-3 years, along with bank statements to reconcile the total gross receipts. if he is making money "under the table" and not declaring every penny as gross revenue, then he is cheating the government and hurting himself.

    you don't mention how much money you declare on your tax return - maybe it's too low a figure to qualify for the priced house you want to get

  • Anonymous
    1 decade ago

    sounds as if you husband may not have declared enough income.....

    if that is the case,noone will be able to help you.....you would need show approx 3 years of reported income....if your husband has declared enough i can't see why you are having a problem with the figures you mentioned....

  • 4 years ago

    Look up a company called Primerica Financial Services and get hooked up with them.

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