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Do Lenders Still Approve with No W2 ?

I have been self employed for 5 years and this has been my only job. I am 28 and have a Masters Degree, have income of $62k/annually, debit is 20% ($2,800/mo) and FICO is 598. I am working on my credit but I am being told that if I don't have proof of income like a check stub, I cannot qualify. by RoseesBRedd2000372 from Boise, Idaho. Apr 25th 2018 Reply

William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,728 contributions

Yes.. Lenders have always lend to borrowers without W2's.. However, you do need to prove your income. We can use your most recent 2 years tax returns.. but, regardless of how much your business brings in, it's what you claim after expenses that's used for loan qualifying.. so if you bring in $1M a year, but write off $990,000, for loan qualifying purposes, you make $10,000 a year.. Your age means nothing... lenders do not discriminate.. having a formal education means nothing as well.. the most important 2 things are.. Do you pay your bills on time? And do you have sufficient (provable) income to service the debt based on industry DTI guidelines? You have a 598 credit score, so it's obvious you have some credit issues that need to be worked on.. Without looking at your credit report, it's impossible to advise you, but in general, certain derogatory events have mandatory waiting periods.. BK, Foreclosure, Short Sale, Judgments, etc.. if you have one of these issues, regardless of what your credit score is, you still might not qualify.. Also, you are calculating your DTI incorrectly.. $62K annually is $$5,167 per month.. if your monthly debt is $2800, then you are at $54% DTI.. (Minimum monthly debt / Monthly gross income = Back End DTI) When it comes to calculating your DTI we take the minimum payments on all your structured debt. Credit cards, Student loan payments (regardless of deferment) car loans, etc.. then add the housing payment to come up with your total minimum monthly debt. We do not include utilities, insurance, health care, cell phone, etc.. those are not debt, they are bills.. In my experience, most borrowers *(and some dumb lenders) do not calculate DTI correctly.. it's best to let a pro look at your complete loan profile and once they analyze it, they can give you instructions on what steps you need to take in order to put yourself in a position to get approved. So my suggestion is to get off the internet, call a local mortgage banker/broker and apply with them. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 NMLS# 226347 / LendUS, LLC - NMLS #1938. AZ #BK-0924551. Equal Housing Opportunity

Apr 25th 2018
Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,703 contributions

Whoever is telling your check stubs is wrong. Under standard loan guidelines, you must prove and document sufficient income to safely afford the payments. For self employed, this means providing your last two-years business and personal Federal Tax Returns. We look to see what you brought in the front door, what you wrote off for costs and expenses, and essentially whatever is left that you reported to the IRS as income is what we use for your loans qualifying income. Its a bit more complicated than that, but you get the idea. Many self employed are able to take advantage of tax code to reduce their income to problematic levels for mortgage income purposes. For those people, we may have alternative loans, like using bank statements for qualifying income. These alternative loans require big down payments and have higher interest rates. Read my web page on self employed loans for more information at

Apr 30th 2018
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