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How do you get a home loan as an entrepreneur?

Do all entrepreneurs fall under the "self-employed" category and if so, are they required to present two years of tax returns before applying for a loan? by robeve_563_903 from Tuscon, Arizona. Jun 12th 2012 Reply


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

Entrepreneur's is not a recognized employment category.. Your self employed. The federal government has made it illegal to offer financing without proving the ability to pay (stated income), so you will have to provide 2 complete years of tax returns, both personal and corporate. What you qualify for will be determined by your adjusted gross income.. The lender will use the same income you use to pay taxes on.. so if you're writing off everything, you might not show enough income to qualify for a mortgage... if you want to be sure, gather up your last 2 years tax returns and get them over to me.. We'll know within minutes of what you will qualify for.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jun 12th 2012
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Linda Wintersteen (Linda123)
#62 ranked lender in Arizona - 1,256 contributions

HELLO , from AZ..!!!!! What do you do for a living???? linda at yourloanpartnerforlife@live.com or website www.yourloanpartnerforlife.com

Jun 12th 2012
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Raymond Denton (Raymond)
#11 ranked lender in Ohio - 224 contributions

Yes, but there are a few Stated Income programs available, for those who'd have trouble qualifying with tax returns. Look for a Mortgage Broker that works with Portfolio Lenders, and you'll find some offering a Stated Income program.

Jun 12th 2012
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Brett Pehrson (brettpehrson)
#19 ranked lender in Utah - 228 contributions

Yes, you fall under the "self-employed" category. Depending on what you do for a living, though, you may be able to find a broker with a portfolio lender relationship where more "common sense" underwriting is used if you're strong on assets and credit. Otherwise, a quick rule of thumb to analyze your own returns might be to look at your "net" income and add back in depreciation; then average that over the last 2 years. If your current year is going well, then you can also make an argument for a higher average income based on a year-to-date Profit & Loss statement. It can get a little more complicated than that depending on your business structure, but that will give you a good idea where you stand, at least.

Jun 12th 2012
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,728 contributions

This is from my Blog....Is there such a thing as "Stated Income" loans anymore?? The answer is no... Sort of...The Financial Reform Bill HR4173 signed into law by President Obama on 8/1/10 outlaws stated income and no doc loans.Section 1411 reads:''(4) INCOME VERIFICATION.--A creditor making a residentialmortgage loan shall verify amounts of income or assets thatsuch creditor relies on to determine repayment ability, includingexpected income or assets, by reviewing the consumer's InternalRevenue Service Form W-2, tax returns, payroll receipts, financialinstitution records, or other third-party documents thatprovide reasonably reliable evidence of the consumer's incomeor assets..."The new law does allow exceptions to this rule for HUD, VA, USDA and Rural Housing Service loans, however the exceptions usually refer to streamline refinancing of these loans.Lenders are now required to verify that you have income and the ability to repay. For conventional, FHA, VA, and USDA, this means tax returns, w2's and or 1099's and paystubs. However for hard money, soft money, and portfolio loans where the mortgage is not insured, the lender can choose their own form of verification. For example, I had a client that had just had a foreclosure on a property he was $100K negative. He had a 401K and wanted to take some of the money out and use it as a down payment to purchase a home. Under conventional, FHA, VA and USDA, there is a mandatory waiting period of 2 to 3 years after a foreclosure before you can get approved for a new mortgage. We arranged financing through a "Hard Money" lender. Terms and interest rate were ridiculous; however we were able to get financing for him just months after his foreclosure. He was self employed and was putting 40% down. His tax returns show very little income, however he did have a large amount of money going in and out of his business account. The lender used his bank statements for the business account to show he had the ability to repay the loan, thus complying with the new law. So, for the majority of us who wish to use conventional lenders for our financing needs, the stated income loan no longer exists. However if you have no choice but to use "Hard Money" lenders, then financing is available to you with very relaxed guidelines for verifying your ability to repay. Rest assured they will find a way to allow you to pay more than double the going rate, and hit you hard on lender costs, but a loan does exist for you. WilliamAcres.com

Jun 12th 2012
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Bradley Manhoff (Autobahn)
#4 ranked lender in Arizona - 9 contributions

There are some lenders that will use an asset depletion calculation to determine income. If you have a large investment account they can use, then you may consider that option. There is always the private money option. These days its not as expensive as it used to be.

Jun 12th 2012
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Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 2,300 contributions

Working individuals who do not draw a regular paycheck, and work for themselves are referred to as "self employed" borrowers. In today's lending world, two years of taxes will be required and the income will generally be averaged. I would be happy to work with you to get you qualified. We're Tucson based and love working with self employed individuals. Give me a call. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950

Jun 12th 2012
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