Mortgages for Self Employed

Apply for a Mortgage Santa Clarita can be challenging but if you are self employed, it gets much harder. If you follow some simple methods it can be much easier to qualify for Mortgages for Self Employed. Most small business owners have their business in a S corporation, get a W2 paycheck and income comes in via  a K-1 from the S corp. Here are some tips for that mortgage situation.

First, a business owner needs to understand that while he used the S corporation to reduce the taxes he would owe, it might hurt him in getting approved for a new home loan. Income is calculated over a 24 month period, not last months paycheck amount. We regularly get business owners who put their income at a high amount based on current pay. They think raise their paycheck amount and get approved. Not that simple. Income will be calculated off the tax returns for the past two years and then supported with current pay.

If your income has dropped in the most current tax filing, then only the most current year income will be used. Mortgage qualification is always using the most conservative approach.

Fannie Mae Qualification

Business owners can go online and get the Fannie Mae form # 1084. This is the form used by most Underwriters to approve a Santa Clarita mortgage application. There are also good instructions online to help you complete the form. From the simplest to the most complex multi corporation tax returns, this form addresses it all. You can also request an experienced mortgage professional to complete the form for you. Once the form is completed, it will tell you the true 2 year income to be used for mortgage qualification.

Debt To Income-DTI

If a business owner is turned down for a new home loan it is usually due to the DTI ratios. Basically, everything on your credit report plus the new mortgage including taxes, insurance & HOA cannot exceed 43% of your Fannie mae form #1084 income. However, you can help the situation with some mortgage experience. As an example, if you have an auto payment, most likely you pay it from the business account. That all gets expensed against the corporation. The auto payment and a host of other expenses can be added back to your income and many times it will be the difference in getting approved.

Deal with The Bank

Your first choice in getting a mortgage should always be the Bank. They make a profit off the fees they charge you on your checking accounts, ect and don’t want to loose that by turning you down for a new home loan. You can Get Started now and get your approval with 24 hours right here.

Mortgage Payment Calculator

Before you go looking for a new home or try to do a mortgage refinance for business owners, take the time to get all the required documents ready. Also, take the time to calculate how much of a home you can afford using a mortgage payment calculator.

Get a Credit Report

Your credit report is the best guide of your ability to get approved for a new home loan. If you have some blemishes on your credit, many times they can be dealt with and overcome by an experienced mortgage professional. We can get you a report the same day you apply and discuss several mortgage options to pursue. If you are self employed and looking for a new home loan give us a call.

Mortgages for Self Employed are available and understanding your options is a good place to begin.If you are looking for a Santa Clarita home loan or even a refinance Santa Clarita and are self employed, take the time to find a lender who specializes in this type of mortgage.