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First time home buyer with questions before applying

Ok, I'm trying to determine if i should apply or just rent. I have worked for over 5 years and I worked consistently at the same. I am now making 22k a year part time and i graduated last year. In January I became self employed and I make about 4000+ every two weeks. My bank statements show the income and has been consistent for over 3 months now. I'm looking to purchase my first home and I was planning on applying in the summer when my self-employment reaches 6 months and bring up my savings. Right now I have 10k, but I'm trying to save upto 20k for a downpayment. I would like to purchase a house between 200,000 and 280,000. I live in california as well. I'm just wondering if I should apply and see what happens or should i just rent a place for another year then apply? I'm still working my w-2 job, but i now have self employment income that will be taxed next year. I guess the question is pretty simple, do you think the bank would personally look at the loan and make a loan to loan evaluation on the situation, or will it be automatically denied? I also have good credit, above 700. I'm currently waiting to move, but If my chances are slim to none I'll just move out now and go rent somewhere. It just ****s because rent costs more than the mortgage, tax, bills combined. Has anyone ever been in a similar situation if so how did that work out? by sbuste_370_865 from Anaheim, California. Apr 25th 2012 Reply

Elise Groves (EliseGroves)
#524 ranked lender in California - 4 contributions

Most lenders will require a two year history of self employment, so my advice would be to rent for another year, and once you have your 2011 and 2012 filed taxes with Schedule C showing your self employment, then try to get financing. Be careful though of writing off all of your income and trying to pay as little taxes on that income as possible. Lenders will qualify you on your taxable income, line 29 of the Schedule C. If you are writing off part of your home as office expense, you may or may not be able to use that as income depending on the type of financing. Otherwise, a lender will qualify you only on your $22,000 income. Good luck to you and if you need any further information, please visit my site at

Apr 25th 2012
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