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Couple of Mortgage Questions

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Hello,

 

My husband and I have been patiently waiting to buy a home for years. We had a lot of obsticles that kept us from being where we needed to be that we have now overcome. We have been in a lease purchase for the past couple of years for a home that we will be purchasing for $250K and we have accured about 10K for the downpayment though we may be able to come up with a few grand more if needed to close.

 

Here are our current issues: I am self employed & my spouse is on SS Disability. His income is non-taxable. Majority of my income is through a contractor position that I have held with the same employer for over 6 years now. After our accountant completed our income taxes this past year, I was concerned it might not appear that we make enough income to qualify. I currently bring in 60K per year for this contract posiiton plus another 5-10K in additional contract work. I have roughly 5-7K in expenses however, the way my home office is setup it is a large portion of our home and after they completed the home office exemption and household related expenses, my taxable income appeared to only be about 20K.

 

Since the majority of the reasons my income looks so low is due to our home expenses which would be similar if we were to purchase the house, how would they look at my income for qualifying for a mortgage? Would they look at it before the home office exemption was used or after? Also, I have heard that SSD income is sometimes counted as more due to being non-taxable. Is that true? My spouses income from SSD is roughly $30K.

 

I also wondered if being self-employed ended up causing too much problems if my employer ended up hiring me a a fulltime employee instead of a contractor if that would change the situation. We had discussed doing that as well anyways.

 

I appreciate all of your input. I have been dreaming of being a homeowner for so long and we finally found our dream home that couldn't be more perfect for our children.

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You should be able to benefit from any lease option credit that may exist in your lease. Does it? Do they credit anything towards the downpayment requirements?

 

Your income will be adjusted gross with depreciation added back in and that's it. RARELY will they take business bank statements with X% of deposits as income (Not anymore!!!!!). His income will be 125% of the disability amount. They gross up his income due to lack of taxability. If it doesn't "Appear" that you don't make enough income, you won't make enough income. It is what it is and you can't make it appear that you make more or less. Can't say you make nothing to the IRS and then expect to say you make millions to an underwriter.

 

You don't have a home office "Exemption". You have home office expenses. If you owned, it would be a depreciable expense. Your income will be $20K plus the expense for home office.

 

You could switch to w-2 employee status. It wouldn't hurt you. You'll need a paycheck before you can close assuming everything else is ok.

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Yes, our lease does give us $250 per month of our rent that is being allocated for our downpayment. I definitely understand and am aware that if you choose to list allowable business deductions when filing your taxes that is factored in your gross income. Our taxes were based off the sq footage of our home and the home office which gave them a formula for allocating a percentage of our monthly rent, utilities & house repairs that reduced our taxable income. I had suspected that since those were expenses related to home ownership they wouldn't be removed from my income that determines how much mortgage we could qualify for.

 

I am assuming that when you said "Your income will be $20K plus the expense for home office." that I am correct in this assumption that the home office expenses would be added back into my income for the purpose of a mortgage.

 

Thanks for your response. That makes me feel more promising that we could qualify without waiting to file another year of taxes. I am sure I will have more questions as we get further into this process.

 

Thanks!

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