Is investment loan the only option?

spranz98

LoanSafe Member
Mar 26, 2014
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I am a current homeowner who underwent serious back surgery and is looking to move to a lower maintenance home with an HOA. The issue lies in getting a mortgage as in the past two years I became a partner in an LLC. While I have a credit score close to 800, funds to make the payments as well as savings to easily make a down payment of 20% or higher and still have at least 24 months reserve for monthly mortgage payments, my past years tax return is not stating enough income according to my broker because I am self employed. I was in the hospital and recovering for 6 months and did not take many owner draws.

I was told the only way I could get a mortgage is to have a co-signer (my mother) which wont work because of the debt she carries with her own home. One option im being told would be to have her purchase the home as an investment property and use me as a co-signer so that my name could be on the mortgage and not just the deed. She will be able to claim the 'income' from the investment which would satisfy the debt/income issue that we'd have with cosigning. I would pay the monthly mortgage payments and in a year or so when they like my tax return (as long as interest rates are ok), refinance her off the mortgage completely.

I understand the interest rate for an investment property is higher than an owner occupied property. Considering my current interest rate is high as i havent refinanced in 6 years, the investment interest rate would still be lower than what I am at now. After speaking to a realtor, my home value is not likely to increase and I will only be shoveling more money into it as it is an old home that does require a lot of maintenance. I will be spending more to hire people to maintain this property for me than it is worth, so id like to try to move as soon as possible.

I was wondering if anyone could see any other way to obtain a loan aside from having someone else purchase it as an investment property?

Thanks in advance!
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
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San Diego, California
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Welcome and thanks for joining the LoanSafe community.

Getting as mortgage when self-employed in today's market is very tricky as many (like yourself) have a hard time proving what you really make based off your tax returns. Regardless of your credit score or down payment amount, you must be able to demonstrate through your tax returns that you have the means to make the monthly payment due to the new Ability-to-Repay provision.

Virtually all lenders follow the same guidelines and there's no way to get around this unless you qualify for a stated income portfolio program. These portfolio programs are not hard money nor are they regulated by Fannie Mae and Freddie Mac's guidelines. We do work with a lender who offers stated income portfolio loans, but they require a substantial down payment to qualify.

Below are some basic program guidelines:

Primary Residence, Second Home and Investment
Purchase, Rate/Term Refinance and Cash Out


  • Self Employed Borrowers Only
  • Down payment of 45%
  • Minimum 3 months business bank statements required
  • Min FICO 620
  • Loan amounts from $200,000 to $2,500,000
  • First-time homebuyers OK
  • Borrowers with up to 10 financed properties OK
  • Second Home and Investment Properties OK
  • No tax returns or 4506T required
  • Gift funds acceptable after minimum down payment contribution
  • Interest only available
  • APR in the mid 5% range
 

spranz98

LoanSafe Member
Mar 26, 2014
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0
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thank you.. so if I have this correct, you're basically saying that since I am self employed i would have extreme difficulty moving and that the only option (as i stated in my original post) is to have someone else (someone who is not self-employed) purchase this as an investment property for now and I just pay the mortgage?
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
Unfortunately yes, the new mortgage rules that came into effect in January have made it much more difficult for self-employed borrowers to get approved for a mortgage. Unless of course you go for the portfolio loan program above which requires a substantial down payment, but it's NOT a hard money loan nor does it require PMI.
 

spranz98

LoanSafe Member
Mar 26, 2014
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I would actually only be looking to mortgage 180k. Do you know anything about interest rates for an investment property?
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
In many cases they're actually not too bad, generally about 1-1.5% higher than a primary residence.
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
My pleasure. If you can show decent earnings for the 2013 calender year and again for 2014 filings, you should have no problem qualifying for a mortgage on your own next year as your earnings will be averaged over the last 24 months.

Good luck!
 

gccseo1

LoanSafe Member
Jan 23, 2015
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