+1 vote
My Urgent Care is 3 years old with gross revenue of over a million dollars this year but my accountant shows very little profit because of write offs from the cost of opening this business. My income is based on a small bi weekly pay and shareholders distribution. I want to sell my home and purchase a new home but I don't know how I would qualify for another mortgage?
asked Nov 22, 2017 in Buying a Home by Dr. J

2 Answers

+1 vote
There are several issues in play here -- the relatively new self-employment, the fact that you're a doctor, and the  extraordinary startup costs. Being self-employed for three years is good, and meets the minimum requirement for many programs. If your business costs were higher in the first year or two, you'll be happy to know that many programs, including Fannie Mae, only require one year of taxes. So if your most recent return shows good income, you're okay.

The next thing to consider is how underwriters look at income.

Your accountant can easily work this out with a Fannie Mae Form 1084, Cash Flow Analysis. Some items, like depreciation, get added back into your taxable income. As do extraordinary expenses. Others, like windfall income, may be removed from qualifying income.

From there, our Home Affordability calculator https://themortgagereports.com/mortgage-affordability-calculator can help you see what you can comfortably afford.

Finally, there are special programs out there for doctors (because your income is known to be increasing and stable), which may work if a traditional loan doesn't. These can cost more.

And for all self-employed applicants whose tax returns don't affect their cash flow, there are bank statement loans, and your income is established by a 24 month average of deposits running through your accounts, not your taxable income. Again, these tend to cost more than traditional mortgages.
answered Nov 27, 2017 by GinaPogol (47,650 points)
edited Nov 27, 2017 by GinaPogol
0 votes
The best mortgage loan program for self employed borrowers are bank statement mortgage loans for self employed borrowers and non-qm loans.  We are direct lenders with no overlays on government and conventional loans and correspondent lenders on non-qm loans. 24 months bank deposits are averaged to derive monthly income. No tax returns required on bank statement mortgage loan program for self employed borrowers and non-qm loans. 50% of deposits can be used on business bank statements and 100% deposits are averaged  with personal bank statements to derive monthly income.  

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Gustan Cho Associates
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The Gustan Cho Team at USA MORTGAGE NMLS 227262
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answered Feb 15, 2018 by GustanCho (106,540 points)

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