Posted on: 07th Feb, 2009 10:07 am
Hello!
My husband and I are recently graduated dentists who have been working for the past 6-7 months. We both work as independent contractors and are paid based on our production. We would like to buy our first home, but have been told that we will not qualify because we don't have a two year work history since we've been in school. Is there anything we can do to buy a home on our own, short of waiting another year and a half?
One more question: My mother is willing to be a co-signer, but she was told by her bank that it wouldn't help us at all. According to the loan officer, the only way she could help us would be to buy a second home and let us live there. Was this guy correct? Or would she be able to co-sign? (Mind you, we really don't want to have anyone co-sign if possible).
Thank you for your help!
-Desperate to stop renting
My husband and I are recently graduated dentists who have been working for the past 6-7 months. We both work as independent contractors and are paid based on our production. We would like to buy our first home, but have been told that we will not qualify because we don't have a two year work history since we've been in school. Is there anything we can do to buy a home on our own, short of waiting another year and a half?
One more question: My mother is willing to be a co-signer, but she was told by her bank that it wouldn't help us at all. According to the loan officer, the only way she could help us would be to buy a second home and let us live there. Was this guy correct? Or would she be able to co-sign? (Mind you, we really don't want to have anyone co-sign if possible).
Thank you for your help!
-Desperate to stop renting
Although you both do not have a 2 yr work history, some banks do allow education as a reasonable excuse. If you are working in your field of study and you can show consistent income since you started working, then you may qualify.
I believe the reason you are being quoted that you must be employed for 2 or more years is because you are self employed. You do not have regular paychecks which would be the case with a W2 employee.
If you were a W2 employee you could be employed one month and be OK.
However, you are self employed as independent contractors and the guidelines for self employed reuire averaging the last two years income after expenses.
Your mother as a cosigner does not help the self employed scenario. If you were W2 employed and paid, a cosigner would help.
I do not know the size of mortgage you are looking for. FHA mortgages allow copsigners to qualify for 100% of the income required. FHA have limits as to their size by county, so, if the mortgage is over the county limit, that would not be a possibility.
If you were a W2 employee you could be employed one month and be OK.
However, you are self employed as independent contractors and the guidelines for self employed reuire averaging the last two years income after expenses.
Your mother as a cosigner does not help the self employed scenario. If you were W2 employed and paid, a cosigner would help.
I do not know the size of mortgage you are looking for. FHA mortgages allow copsigners to qualify for 100% of the income required. FHA have limits as to their size by county, so, if the mortgage is over the county limit, that would not be a possibility.
We were hoping to qualify for an FHA mortgage. In our area, the limit is $365,700. We are only looking for a $200-300k mortgage. We really just want a started home at this time.
For the FHA loan, I understand that it is 3% down. If we had a larger down payment, does that help qualify us more? Or does it not really make a difference?
With regards to the comment, "FHA mortgages allow cosigners to qualify for 100% of the income required"...would you mind elaborating?
Besides a cosigner, is there anything else we can do?
Thanks for your replies!
For the FHA loan, I understand that it is 3% down. If we had a larger down payment, does that help qualify us more? Or does it not really make a difference?
With regards to the comment, "FHA mortgages allow cosigners to qualify for 100% of the income required"...would you mind elaborating?
Besides a cosigner, is there anything else we can do?
Thanks for your replies!
Mortgage lenders like high credit scores and large down payments and many months of reserves and income that can be verified properly.
No one of those things overcomes income that can be veriifed properly.
By properly, I mean, if you are self employed, two years history is required and after expense income reported to the IRS will be averaged for the past 24 months. With self employed, the first year of employment often has large business expenses and averaging that income after expenses (not gross receipts) often drags down the second year income.
FHA guidelines allow for co-signers to be 100% of the qualifying income. That means a relative who has enough income to qualify for your house debts along with thier debts, still meets the debt ratio requirement.
These days many lenders are stricter than the FHA guidelines allow. So, best to speak with a local broker if you have a qualifed cosigner (relative) who has enough money to qualify you and themselves.
A co-signer is someone whose income is used to help qualify. They are not on the title and not on the mortgage.
A non-0ccupant coborrower could be a little better. They do not live in the property, but, they are on tile and they are on the mortgage.
Once again, first you need the cosigner or coborrower, then you need to check with a local broker to see if any lenders do it. Just becasue FHA allows it does not mean lenders are "willing to do it"
No one of those things overcomes income that can be veriifed properly.
By properly, I mean, if you are self employed, two years history is required and after expense income reported to the IRS will be averaged for the past 24 months. With self employed, the first year of employment often has large business expenses and averaging that income after expenses (not gross receipts) often drags down the second year income.
FHA guidelines allow for co-signers to be 100% of the qualifying income. That means a relative who has enough income to qualify for your house debts along with thier debts, still meets the debt ratio requirement.
These days many lenders are stricter than the FHA guidelines allow. So, best to speak with a local broker if you have a qualifed cosigner (relative) who has enough money to qualify you and themselves.
A co-signer is someone whose income is used to help qualify. They are not on the title and not on the mortgage.
A non-0ccupant coborrower could be a little better. They do not live in the property, but, they are on tile and they are on the mortgage.
Once again, first you need the cosigner or coborrower, then you need to check with a local broker to see if any lenders do it. Just becasue FHA allows it does not mean lenders are "willing to do it"
john, i am in agreement. i would think that the "co-signer" thought was really addressing the non-occupant coborrower scenario you posed. it would seem an appropriate solution to their issue. being independent contractors, even in as lucrative a field as dentistry, isn't all that special when you are trying to verify income, as you noted.
i'd say that you ought to be able to find a lender to help you, newbie. we do this in our office, and we're nationwide, for example.
i'd say that you ought to be able to find a lender to help you, newbie. we do this in our office, and we're nationwide, for example.
based on your recommendations, i spoke to someone about having my mom be a cosigner and based on the numbers it looks like my mom will qualify--we didn't have them run any credit reports or anything at this time. she recently refinanced her home (actually just closed last week). we would like to move sometime in july or august. when would be the best time for us to start applying for pre-qualification? does it matter how much time there is between her refinance and a pre-qualification application? (should there be a minimum number of months, for example.) thanks again for all your help. you guys are great!
Btw, why would a coborrower be better than a cosigner? With my husband and I already on the title, would they allow a third coborrower?
newbie, most discussions using "coborrower" and "cosigner" are using the terms in the same manner. however, a cosigner is more generally construed as someone who is guaranteeing payment, rather than actually having an interest in the loan itself. a coborrower, on the other hand, is actually actively involved in the process of the loan, and is simply "another" borrower along with the "borrower."
of course, most people consider cosigning to be relatively meaningless, but we know it isn't because people default on loans all the time, and when that happens on a loan that someone has cosigned, guess who gets a phone call looking for money! yup...the cosigner, who thought all he or she did was sign a paper and then forgot completely about it.
anyway...to answer that last question...no, adding your Mom as a third borrower is not useful - it's not disallowed, but if she's qualified to cosign, then let it be.
of course, most people consider cosigning to be relatively meaningless, but we know it isn't because people default on loans all the time, and when that happens on a loan that someone has cosigned, guess who gets a phone call looking for money! yup...the cosigner, who thought all he or she did was sign a paper and then forgot completely about it.
anyway...to answer that last question...no, adding your Mom as a third borrower is not useful - it's not disallowed, but if she's qualified to cosign, then let it be.
Hey I only have 1year of work history and wanted a mortgage loan, would I still qualify? Or would I have to get a co-signer? And how would a co-signer help? Does the co-signer have to be first time home buyer?
Your query has been answered in the given link:
http://www.mortgagefit.com/firsttimebuyer/1yr-workhistory.html
Please take a look. Hope it helps you.
http://www.mortgagefit.com/firsttimebuyer/1yr-workhistory.html
Please take a look. Hope it helps you.
What if the 2-year work history ONLY comes from capital gains income, from trading in the markets. Self-employed status and tax returns report only capital gains income. Does that qualify for a conventional or FHA loan?
sarah...I guess you should look out for stated income loan. But again getting stated income loans in this market situation is quite difficult. I would suggest you to speak to some of the lenders and check out if they can offer you stated income or no-doc loans.
Hi
This is true that getting a conventional loan for a self-employed people isn't easy as they often fail to provide the proof of their income. In this case, a stated income loan is a good option. But getting such a loan in this market is difficcult. Sarah, you need to get in touch with the few lenders who still offer such loans.
This is true that getting a conventional loan for a self-employed people isn't easy as they often fail to provide the proof of their income. In this case, a stated income loan is a good option. But getting such a loan in this market is difficcult. Sarah, you need to get in touch with the few lenders who still offer such loans.
i'm not quite certain how capital gains would be viewed in the current economy. after all, how reliable is that as a source of income, given the wild fluctuations in value of investments?
Hello, I have been self employed for almost a year now, and I am trying to finance a mortgage of only $120K. I have $15K to put down. I was told I had to have 2 years of self-employment history (AFTER being pre-approved they realized that), which I don't. I told them I have my father who is willing to be a co-signor, who has a credit score of 786. They came back and said sorry, we have tried everything, but he will have to purchase the home himself and you can just be on the title. However, I am buying my first home right now because of all the incentives and I won't buy if I can only be on the title. I'm wondering if you know of ANY lenders that aren't so strict? I make plenty of money (about $4500/mo) to pay for a $700/month mortgage. I have very limited liabilities, maybe $500-$600/month. Any help is GREATLY APPRECIATED! Thanks.