any business owners out there?

wildstyle · January 2012

Hi everyone,

My H and I own two businesses - one profitable and one very new and making a tiny profit. I have been working for myself for 10 years.

We plan to buy house at the lower price end of our already very LCOL area, where you get a lot for your money. We make really great money for the area were live in and live below our means. We are debt free and have been so for several years. We are a bit older than most first time buyers and have been and are currently renters - mainly b/c we were not sure where we wanted to stay until now.

We have a substantial down payment saved - roughly 50% of what we plan to spend and have savings on top of this. Our goal is to get a mortgage but pay it off in 5 years or so. This would be our forever home, we don't plan to move again.

My H thinks we will have problems as we don't have regular jobs.

Any specific things I should look out for? Many thanks!

lil_jen051708 · January 2012

I think you'll need to provide several years worth of tax returns but I don't think you'll have a huge problem. There will probably be more documentation than a person with a regular job but I know it's possible.

You might reach out to a mortgage consultant to get preapproved and let them know you are both self employed and ask what you need to prepare. They might want your 2011 taxes filed since it's that time of year. So you might need to get that paperwork together a little sooner than you normally would.

misscrafty · January 2012

I work for myself and I had to provide a few years of tax returns and also provide an income statement (earnings and expenses) separated by month for this past year, 2011.

Since you two have so much to put down hopefully you won't face any problems. Good luck!

breaness · January 2012

It's definitely more annoying than just having a job, but not too bad. In my case I work AND I own a business so I had to do double the paperwork. They needed way more information for the business than my job.

Its not impossible though. Good luck!

Jhawks482 · January 2012

I'm late to your post, so I'm not sure if you'll see this, but I thought I'd offer my two cents. We just bought a house last summer- my DH is self employed and has been since 2003. I work VERY part time, and my income was pretty much worthless on determining our home loan. Anyway, we had to show personal and business taxes for 2009-2011. On top of that, we had to explain every large deposit into his business checking during the period we were trying to buy a house. For instance, my husband owns a moving company and if there was a job that cost 2,000 dollars, we had to write a letter stating that it was simply a payment for a job completion. It was all very time consuming and ridiculous. There were a lot of questions, and it seemed like we were always searching for some sort of paperwork that the bank needed. We ended up switching lenders (from Bank of America to a smaller local lender), and they were MUCH less picky about stuff. my most valuable piece of advice is to go through a small, local bank (even though they will probably end up selling your loan). Lastly, we both had fantastic credit, and had a very sizable down payment to bring to the table. None of that seemed to matter- they want taxes to make sure you have had a steady income for a few years. Good luck to you!

wildstyle · January 2012

Jhawks482:
I'm late to your post, so I'm not sure if you'll see this, but I thought I'd offer my two cents. We just bought a house last summer- my DH is self employed and has been since 2003. I work VERY part time, and my income was pretty much worthless on determining our home loan. Anyway, we had to show personal and business taxes for 2009-2011. On top of that, we had to explain every large deposit into his business checking during the period we were trying to buy a house. For instance, my husband owns a moving company and if there was a job that cost 2,000 dollars, we had to write a letter stating that it was simply a payment for a job completion. It was all very time consuming and ridiculous. There were a lot of questions, and it seemed like we were always searching for some sort of paperwork that the bank needed. We ended up switching lenders (from Bank of America to a smaller local lender), and they were MUCH less picky about stuff. my most valuable piece of advice is to go through a small, local bank (even though they will probably end up selling your loan). Lastly, we both had fantastic credit, and had a very sizable down payment to bring to the table. None of that seemed to matter- they want taxes to make sure you have had a steady income for a few years. Good luck to you!

I'm so glad you posted, very valuable info. I have had my company for 9 years and the income is steady so it's good to know that will help us. We are planning to go through a local bank too so it's good to hear that this is helpful. We moved all our business and personal accounts to this local bank so they can see we have decent $$ and steady income coming in.

any business owners out there?

Re: any business owners out there?

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