SelfEmployed75

FHA Loan, Self-Employed & Payroll/Dividends

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Hi all, I am looking for some information and advice.

I am looking to get an FHA loan for a home (due to Ch. 7 BK 34 months ago I can't get a conventional loan). We own our own business (50/50 share holders) however the loan will be just in my name.

How is income calculated in a situation like this? We take dividends throughout the year. Last year it was divided 50/50 but this year I took an 80% share.

The home is a new build so it wouldn't be ready until next year which means we will use 2012 taxes and 2011 taxes for qualifying I am thinking. We would first need to get pre-qualifyed for the loan, is that the same process as getting the final loan and so, will they look at 2011 and 2010 plus P&L for 2012?

Edited by SelfEmployed75

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We had a similiar situation, 30 months post BK7...except that I wasn't self employed, but had a "real job". Since DW had an IRS lien on her CRs, we applied for only my name on the mortgage, and they used only my income to qualify us.

They'll certainly want your tax returns, and if you filed jointly, that may be a problem. Self employed may also be a problem.

You might PM Denita...seems to know quite a bit about such things...

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I see that you live in AZ, a community property state. I am not familiar with the nuances of getting a loan in a community property state (my state isn't one).

Make sure your income is enough to support the loan - speak to a mortgage banker now before you file for 2012 taxes. Many self-employed borrowers deduct too much to support the new house payment with the appropriate ratios.

I think in community property states that your wife's debt will be included in your ratios - but verify with the mortgage banker.

A pre-approval is not the same as a full approval. A good pre-approval will have you submit all of your documentation before it is issued so you don't contract for too much house, but the full approval is tied to a specific property using the actual taxes, insurance etc. If you are buying a newly constructed property, then the lender will estimate appropriate taxes. Yes, you will need to supply your tax returns to the mortgage banker to get the pre-approval. If they don't ask for it, then run the other way. No one can issue a valid pre-approval without having looked at your tax returns since you are self employed. You will need to supply 2010, 2011 and YTD P&L for the pre-approval.

Edited by Denita

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Thank you for the reply.

I think the timing here will be an issue and we may have to wait until we do our 2012 taxes to go forward. In 2010 and 2010, we each took equal payroll and "draws" but this year, I took all the payroll and 80% of the draw which won't be reflected until we file our 2012 taxes.

Ill update this thread as we go through the process, we'll see what happens.

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