I'm self employed and am probably going to be buying a new home in 1 - 2 years. I just want to try to get my ducks in a row as soon as possible, as I understand being self- employed presents its own set of problems with mortgage qualification. I'm hoping some of you mortgage experts can provide a little guidance.
I've owned my own business for 15 years and my annual income fluctuates greatly...and I mean greatly. In fact, every other year is a good/not so good year. It's always been that way and is just kind of the nature of my business as it takes a long time (years sometimes) for things to pay off. It has nothing to with the amount of work/business I have, as that has remained relatively constant.
My understanding is that banks will calculate "income" for purposes of qualification based on last 2 years AGI. Unless...the last year was a "down" year, and then they will only use the last year. So if the last year was a high year, they average it with the previous lower year. But if last year was a low year, they won't include the previous higher year. Is this about right?
Are there any banks/lenders that will use more than 2 years? Is there any other way to get lenders to look beyond the 2 year rule?
Any other options, thoughts, etc.?
If it matters...we'd be looking at a jumbo loan with 25% - 35% down.
I've owned my own business for 15 years and my annual income fluctuates greatly...and I mean greatly. In fact, every other year is a good/not so good year. It's always been that way and is just kind of the nature of my business as it takes a long time (years sometimes) for things to pay off. It has nothing to with the amount of work/business I have, as that has remained relatively constant.
My understanding is that banks will calculate "income" for purposes of qualification based on last 2 years AGI. Unless...the last year was a "down" year, and then they will only use the last year. So if the last year was a high year, they average it with the previous lower year. But if last year was a low year, they won't include the previous higher year. Is this about right?
Are there any banks/lenders that will use more than 2 years? Is there any other way to get lenders to look beyond the 2 year rule?
Any other options, thoughts, etc.?
If it matters...we'd be looking at a jumbo loan with 25% - 35% down.