U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 01-03-2010, 07:23 PM
 
32 posts, read 84,456 times
Reputation: 21

Advertisements

Hi everyone,
Well the title of this thread pretty much sums up my question but here's the long if it.
A year ago I took the plunge, started working for myself, and my business has done better than I imagined. In 2010 I hope to be buying my first home. I was able to put 10K in savings over the past year for a down payment on my condo to be, and I also have some money set aside to pay my taxes this coming tax season when I will be for the first time filing as self-employed. All I'm looking to get into in a condo, something in the 50K range which will be very easy to afford at my current rate of income (hell i pay more now in rent then a 30yr fixed for a 50K condo would run me). My credit score is around 750, I have very little debt/bills, this past year I cleared 40K net working from home, and bottom line I'm wondering how much of that income I need to show the IRS so that my bank will be happy and give me a 30 yr fixed lone for the rest?

If you need anymore numbers to better answer this please let me know.

Thank you
Rate this post positively Reply With Quote Quick reply to this message

 
Old 01-04-2010, 06:07 AM
 
Location: Plano, Texas
1,675 posts, read 6,810,092 times
Reputation: 697
You will have to supply the lender 2 complete years of tax returns proving your income. If you have only been self employed for 1 year, you will not be able to get a mortgage regardless of credit. Self employed borrowers must prove 2 years of being self employed.

As far as income to debts, lenders want your debt ratio under 45%. So if you are making $4000 per month, and your monthly bills plus potential new mortgage is $1500, your debt ratio would be 1500/4000 = 37.5%.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-04-2010, 07:27 AM
 
32 posts, read 84,456 times
Reputation: 21
Thanks for the reply,..
I've heard about the two year thing, but ive also heard some will make exceptions. Doesn't hurt to try i figure. If not ill just have to wait till next year to buy, not the end of the world, and ill have even more to put down by then as well as a better credit score.

As for the debt ratio, what all is included in that? I mean i assume they want to know EVERYthing you pay money on but what will they for sure factor in? I'm not sure if im going to do my taxes myself this yr or pay someone to do them for me but i definitely want to make sure to claim enough to make the bank happy when i go for a loan, but not so much the IRS rapes me,.. and i don't think ill need to claim/show the bank a lot of income because if i get into a condo for 50K my monthly mortgage payment will be like $300 on a 30 yr fixed.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-04-2010, 10:20 AM
 
Location: Plano, Texas
1,675 posts, read 6,810,092 times
Reputation: 697
Included in your debt ratio would be any accounts that show on your credit report. So you would have to included car payments, student loan payments, minimum payment on credit cards, etc... You do not count toward dti your cell phone bill, cable, groceries, etc... You would also include the future mortgage payment with insurance, taxes and hoa dues added to principle and interest payment.

I do not know any lenders making an exception on the 2 year minimum time of being self employed. IF you find one, please post back.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-04-2010, 11:57 AM
 
Location: southwest TN
8,569 posts, read 17,177,649 times
Reputation: 16677
So basically, you plan on not reporting lots of income but only as much as you need to in order to finance the house.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-04-2010, 01:13 PM
 
Location: Baltimore
1,802 posts, read 7,915,373 times
Reputation: 1962
Quote:
Originally Posted by NY Annie View Post
So basically, you plan on not reporting lots of income but only as much as you need to in order to finance the house.
That's what it sounds like to me, too.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-04-2010, 01:21 PM
 
28,460 posts, read 80,877,602 times
Reputation: 18660
I wonder what sort of business the OP has started? If it is any that involves making decisions about what sort of clients to accept I wonder how the OP would feel if his clients were the type to show "only enough financial strength to entice the OP to work with the client, but not enough to reveal their true position"...

A mindset of "bending the rules" was common in years past (prior to the collapse of '08) but now the sorts of lenders that did that have imploded and the result is that even well qualified folks are put through the wringer. Any one that gets hung up by the rules that are intended to bring less chaos to the system are not going get any sympathy from me.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-04-2010, 02:07 PM
 
Location: Plano, Texas
1,675 posts, read 6,810,092 times
Reputation: 697
I think some are rushing to judge. What if the OP has legitimate write offs but decides not to take them to show higher income. That is possible, maybe not likely but none of us know.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-04-2010, 02:11 PM
 
Location: Baltimore
1,802 posts, read 7,915,373 times
Reputation: 1962
Quote:
Originally Posted by VictorBurek View Post
I think some are rushing to judge. What if the OP has legitimate write offs but decides not to take them to show higher income. That is possible, maybe not likely but none of us know.
But in that case he/she isn't being honest with the lender.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-04-2010, 02:16 PM
 
Location: Plano, Texas
1,675 posts, read 6,810,092 times
Reputation: 697
honest would be showing the tax returns filed. Anyone that has legitmate write offs, doesnt have to take them.
Rate this post positively Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Similar Threads

All times are GMT -6. The time now is 10:07 PM.

© 2005-2022, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top