Anyone else have troubles getting a mortgage as a business owner? My wife makes a very good salary for our area and my business will gross about 6x what she is making. We have very little debt, and yet I still can only get approved for a crappy mortgage…
I didn’t have a problem but I was in business for over 10 years when I applied for my first mortgage.
I say shop your local credit unions and also try the bank you have a reputation with. I hope you get what you are looking for.
Banks want to see several years of good income from the business. Have you applied for credit under the business?
No. I started the business with my savings account of 2k. The only money I had to burrow was for a truck loan. I have a good standing with this credit union, have been using them for personal for 10 years now… Hard to show good cash flow I guess when you have 15k receivables at all times and also was able to purchase a lot of equipment this year.
Are you incorporated and taking an actual paycheck, or just a sole prop?
Banks have tightened things up a lot. I know some loan officers that are saying that the banks are going crazy with what they now require. I just bought a house a few months ago and my fiance got approved before I would have, shes a teacher.
Best of luck.
i know one factor that the banks look at is your net income from the business.
you can make $100k but write off $70k for expenses.
the bank only considers the $30k that you net to yourself.
I would think your wifes income alone should get you atleast $200k loan, is that not enough house where you live?
in some places like idaho and utah that is a very nice house.
We just went through this. The bank would basically only consider our business liabilities. They weren’t that interested in the income from it. Our business was technically less than 2 years old though.
Ultimately the pretty much only used my wife’s income. So we found a modest house that we are really happy with.
I definitely would look for an institution that will be keeping your mortgage. If they are going to resell it, they are VERY strict.
[h=2] how do you get a mortgage as a business owner???[/h]Not sure how much you are looking for but I just bought a very nice home (3-2). I went through USDA Rural Development. Look them up on the Web. Should be an office near you. Worth a look.
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The type of loan we all must apply for as self employed individuals is called STATED. We are stating our income and therefore must prove and provide a lot of documentation to back it up. A few things you can do to get a better rate and make the process less painfull is try to raise your LTV or loan to value. 20% is normally the lowest a bank will go on a stated program. Going in at 25 to 35% LTV will lower the risk to the bank and normally afford you a better rate and ease of process. Making sure the home you are buying is not over appraised is important. Most people don’t know ths , but you can and will be permitted to get an independent appraisal for the purchase of a home if you feel the original is too high.
Of course a great credit score helps as well.
Next year I’ll be diving into this rabbit hole.
God help me
I bought my house in 2007 and had no problem.
That was before the economy took a dump. I guess it’s tougher now.
Does it make a difference if you establish smaller lines of credit using just the business income? Like an SBA loan or a vehicle loan, to show you have a good payment history?
Checked with a friend who is a mortgage originator. For his bank they require at least 3 years of business tax returns. 5 years would be better. they like to see that your business is growing and doing good. They will only look at around 85% of your income from the business to go towards the mortgage qualification. Credit score over 675. When your buying a house the amount of a mortgage you can get will be based on your debt to income ratio. So if you are using a personal credit card, or other personally guaranteed loans to finance your business. They will affect the amount of a mortgage you can get. Also a bank will want to know where every penny of your down payment came from if it didn’t come out of your personal bank accounts.