Are there any mortgage lenders with Stated Income loan products?
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.
I am an LLC that hires about 2 subcontractors and has various other business expenses...
If my tax return reflects "lower adjusted income" after business items/expenses I can write-off, how can I obtain a mortgage? In other words, I have plenty of "gross" or "pre-tax" earnings; however, would a bank hold this against me when applying for a USDA/FHA loan?
Trademarked, do you have the answer?
You're in the exact same situation as me. I wish I had an answer... I'm trying to find a portfolio lender that recognizes a low ltv, strong credit score, and great cash reserves make up for verifiable income.
Quote:
Originally Posted by TimtheGuy
Yes, a lender is only going to consider your bottom line. We do get to add back depreciation since those expenses do not impact your cash flow. It makes sense if you think about it. If you really have all these expenses that come off the gross how would those funds be available to make loan payments. Gross means nothing.
Everyone else that qualifies (W2) gets to use their gross. Lenders have never used net. I'm not saying you're incorrect, just that it's unfortunate for those of us who are self employed, as we are held to a different standard.
You're in the exact same situation as me. I wish I had an answer... I'm trying to find a portfolio lender that recognizes a low ltv, strong credit score, and great cash reserves make up for verifiable income.
Everyone else that qualifies (W2) gets to use their gross. Lenders have never used net. I'm not saying you're incorrect, just that it's unfortunate for those of us who are self employed, as we are held to a different standard.
Apples to oranges.
Example of S/E borrower:
$600,000 gross
(300,000) less materials
(100,000) less salaries (150,000) less all the other expenses of running the business
$50,000 net income
A lender should use the $600k gross for qualifying? Of course not. The W-2 person does not incur those income reducing expenses. Same standard in my book.
Of course the lenders hear, "well I really make more than it shows on paper". Not only does this make the S/E person a tax cheat, how is the lender supposed to prove what is not documented and why would they want to?
$600,000 gross
(300,000) less materials
(100,000) less salaries (150,000) less all the other expenses of running the business
$50,000 net income
A lender should use the $600k gross for qualifying? Of course not. The W-2 person does not incur those income reducing expenses. Same standard in my book.
Of course the lenders hear, "well I really make more than it shows on paper". Not only does this make the S/E person a tax cheat, how is the lender supposed to prove what is not documented and why would they want to?
Not everyone's situation looks like this. I have deductions that are not real expenses that leave my wallet. I have substantial real estate depreciation and mileage on my car. I also am able to have the business pay for things like business lunches, an unlimited minutes phone plan, and internet access. W2 people don't have food, telephones, and internet come out of their gross income for qualifying.
Not everyone's situation looks like this. I have deductions that are not real expenses that leave my wallet. I have substantial real estate depreciation and mileage on my car. I also am able to have the business pay for things like business lunches, an unlimited minutes phone plan, and internet access. W2 people don't have food, telephones, and internet come out of their gross income for qualifying.
Depreciation is added back to your bottom line. Pretty sure their is cash leaving your wallet or the businesses wallet for phone, internet, business lunches, etc. W-2 people typically don't have to drive around for work, don't pay for their own internet at their workplace, don't use a cell phone for business or pay for business lunches. Those that do file this on Schdule A under unreimbursed business expenses. And guess what, we deduct that from the gross for qualifying.
To answer the 1st question, Yes they still exists and only a few lenders (or your small local bank non-big name bank; hint this takes out the middle man. Now you win as the banks have won a lot already..free money bailouts. ) OK, I am getting sidetracked. They will have it if anyone does. Also, when I did a search and AFAIK, your best bets to get a stated income loan are in CA, WA, NY, NJ & CT.
I actually talked to a broker because who in their right mind would not be looking to buy at 3.5% to 4% interest and lower prices. I know it could go lower though". It ain;t Vegas and look what happened there. By Golly Gee Whiz!! If it is cheaper than rent, why the heck not. (Open hand hitting forehead), , seriously, it seems to be a no-brainer if you can qualify. Wall street may have screwed up the housing market for a while but isn't there usually always a good time to buy.
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.
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.
, seriously, it seems to be a no-brainer if you can qualify. Wall street may have screwed up the housing market for a while but isn't there usually always a good time to buy.
