Obtaining a Mortgage While Self-Employed

**misstina87** · 08-25-2010, 07:13 PM

Let me start with some background info. I currently have a job at a grocery store working part time. A couple of months ago, I was working roughly 30 hours a week. I changed my availability to only work 1 day a week so that I could concentrate on starting my online business. My goal is to obtain a certain amount of income every month with my online business and then do that for a few months until I feel stable enough to buy a condo.

Here's the deal. I've been looking at condos in the $20-30k range in Florida (the one good thing about living in Florida is that housing is cheap). If I went back to working 30 hours a week at the grocery store, I think I could easily obtain a mortgage. However, I can't work 30 hours a week and focus on keeping up with the online business at the same time. I'm only keeping the grocery store job for security. I REALLY want this online business thing to work. Problem is, it is extremely difficult to obtain a mortgage when you are self-employed especially if you have only been doing it for a few months.

So I need some advice. My father could cosign the mortgage with me but his own mortgage is already close to 50% of his income. I would put down 20% as a down payment (or more if I needed to) so I think that works in my favor. However, I don't have proof of income when it comes to my online business. What should I do? I could go back to working 30 hours a week at the grocery store and do that for a couple of months just to have proof of income but my online business would be ignored and that scares me.

**craftypam** · 08-25-2010, 07:24 PM

My dh has been self employed and we always had to give them our income tax because of no W2's. Because of you not having a very long proof of income with online business; it may be better to go back to the grocery store until you get the mortgage. You are right that having the larger down payment will be in your favor, but I think they are going to have a problem with your self employment because they have no proof if the business will provide enough income to pay the mortgage.

**mek42** · 08-25-2010, 10:30 PM

Can you just take a deep breath, set your shoulders and make both happen for a couple months?

**Greebo** · 08-26-2010, 08:49 AM

Keep renting.

Going deeply into debt when you're just at the beginning of building a business is a serious mistake. Keep your costs as low as possible - rent cheaply and stay OUT OF DEBT. Build your business to the point that you can save up money to pay cash for a house. If your business works, once it takes off, it'll be surprisingly easy to save up that kind of cash if you maintain the discipline necessary to succeed.

**NikoSan999** · 08-26-2010, 05:13 PM

Go back to the grocery for the 30...do what you can with the online part time until whatever time. Stay out of debt...Save all money made with the online and see how much you are averaging vs time spent..

Loans are hard to get right now. I live in Florida. Even with good credit etc. Self employed even harder. Self employed wants several years worth of experience at same type of job even in the best of times.

Don't forget about condo fees when budgeting. Also find out if you split the condo fees for the vacant condos as they come up.

We have good friends who looked at a condo. This was in Florida. They were going to sell their house. They found out that as a unit became vacant THAT condo fee was added into the remaining condo owners which made theirs go up. I'd definitely check into that with any that I considered. Don't take for granted.

**staceyy** · 08-26-2010, 10:40 PM

I am a former mortgage banker. To qualify for a mortgage, a self-employed person typically has to show tax returns for 2 to 3 years evidencing their self emplyed income, and the income is then averaged over that period of time to be used to qualify for the mortgage.

**Libby** · 08-27-2010, 02:23 AM

Though it sounds like you have some great sound advice here...why not go to the bank (or lender) and 'just ask questions' w/o specifics?

**Pianolady** · 09-04-2010, 08:34 AM

I'm self employed and just refinanced our home. I can confirm that they require at least two years' tax returns, including all extra forms that would be business related (Schedule C, etc.). If my spouse hadn't had a salaried income, I'm sure they would have wanted even more documentation of my income.