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1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of long)

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dani731
Blessed!!!

Member since 1/08

3355 total posts

Name:
D

1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of long)

DH just started a new job where he will get a 1099 at the end of the year. It is a sales/commission only job. I guess he is considered an independent contractor. I plan to make estimated payments though out the year for the taxes. His previous job was salary plus commission and he got a regular W-2 each year. But the way the owner ran the business was BS and I have been trying to get DH to leave for over 2 years now. He finally left and I am SO Chat Icon Chat Icon Chat Icon !!!

Anyway, with this new job he has the opportunity or the potential to make a lot more money. This great for us because we would definately be able to pay off alot of CC debt and hopefully get our credit scores increased (they are both in the mid 600s right now I think). This all will makes our chances of buying a house next year much more likely.

I have a regular FT Job with a decent salary and I get a W-2 every year.

So after all that my questions are:

Does being 1099 make it harder to get a mortgage?

What do they ask for???

DH's weekly pay is probably going vary alot every week and I am sure there are going to be some weeks where he may not get paid at all.... How does this effect our chances? I can only assume the banks may see that as a risk...

How will they calculate a yearly salary for him?

If anyone can enlighten me I would greatly appreciate it. I would rather be prepared for the headaches that may come up ahead of time than be suprised later when we are actually ready to start looking and get pre-approved.

TIA!

Message edited 2/3/2010 12:08:25 PM.

Posted 2/3/10 11:06 AM
 
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Deeluvsvinny
DONE

Member since 10/08

4952 total posts

Name:
Whatever

Re: 1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of lon)

It's going to be tough...because you will not have two full years of your DH's salary at the commission job..banks usually like to see that. He will have to use his W2 from the old job as well as the 1099 and they will want to see an increase in his overall salary.

I would definitely start working with a mortgage broker/loan officer before you begin the house buying process.

Banks do tend to scrtinize commissioned employees more. It is definitely a greater risk, but as long as his "salary" doesn't decrease, you should be fine.

Posted 2/3/10 11:18 AM
 

dani731
Blessed!!!

Member since 1/08

3355 total posts

Name:
D

Re: 1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of long)

Posted by Deeluvsvinny

It's going to be tough...because you will not have two full years of your DH's salary at the commission job..banks usually like to see that. He will have to use his W2 from the old job as well as the 1099 and they will want to see an increase in his overall salary.

I would definitely start working with a mortgage broker/loan officer before you begin the house buying process.

Banks do tend to scrtinize commissioned employees more. It is definitely a greater risk, but as long as his "salary" doesn't decrease, you should be fine.



Thanks for the response. His salary at minimum should actually double. His base pay at his old job was minimal and he got paid commission monthly. Some months he didn't get commission at all. The owner was always changing his commission structure and all the employees were penalized heavily when orders were cancelled or returned. it was RIDICULOUS!!!!!Chat Icon Chat Icon

So they look for 2 years of 1099??? that would push us back to 2012. If we waited until then we probably would be better off financially but then we would probably miss out on some grant money are trying to get..... But then again if his income more than double this year we may not qualify for that grant money in 2011 anyway......

Message edited 2/3/2010 12:08:35 PM.

Posted 2/3/10 11:38 AM
 

JustJack
:)

Member since 2/06

2041 total posts

Name:
J

Re: 1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of long)

It was almost impossible for us to get a mortgage with DH being on a 1099-he actually had to switch to a W-2 employee because of all the hassle. BUT I didn't have an income-so you might have it easier. Talk to some banks and see what they have to say.

Posted 2/3/10 12:25 PM
 

mandasue
LIF Adolescent

Member since 3/09

772 total posts

Name:
Amanda

Re: 1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of long)

Posted by Deeluvsvinny

It's going to be tough...because you will not have two full years of your DH's salary at the commission job..banks usually like to see that. He will have to use his W2 from the old job as well as the 1099 and they will want to see an increase in his overall salary.

I would definitely start working with a mortgage broker/loan officer before you begin the house buying process.

Banks do tend to scrtinize commissioned employees more. It is definitely a greater risk, but as long as his "salary" doesn't decrease, you should be fine.



i agree, the hardest thing is the work history, having a 1099 is harder but having less of work history is worse

i would say to work with a mortgage broker and they will lead on the path to getting a mortgage

good luck

Posted 2/3/10 1:27 PM
 

alli3131
Peanut is here!!!!!!

Member since 5/09

18388 total posts

Name:
Allison

Re: 1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of long)

I am a 1099 employee and we found it was easier to leave me off the mortgage. Because of all the mortgage issues over the past few years the banks do not accept stated incomes any more....cause basically you DH could say he makes anything and they have no way to verify until tax returns.

I don't want to say its impossible but unless you have a very good mortgage broker that has connections at the banks and knows what docs they need (usually a book of papers from employer) its hard.

Posted 2/3/10 3:21 PM
 

skinny
3 boys and a princess!

Member since 11/08

8178 total posts

Name:
Momma

Re: 1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of long)

We were told repeatedly from bank after bank that unless DH was at his current job for 2 years AND have ongoing paystubs to prove it, we wouldn't qualify for a mortgage.

AND

I have a great job (and have been here for 5 years) and that still wasn't enough.

Even my own bank, who I have used for 10+ years wouldn't even talk to us.

It was nearly impossible for us to get a mortgage. I finally went to a broker and even then we had to jump through hoops for MONTHS. Sheer torture.

Posted 2/3/10 3:38 PM
 

dani731
Blessed!!!

Member since 1/08

3355 total posts

Name:
D

Re: 1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of long)

Posted by alli3131

I am a 1099 employee and we found it was easier to leave me off the mortgage. Because of all the mortgage issues over the past few years the banks do not accept stated incomes any more....cause basically you DH could say he makes anything and they have no way to verify until tax returns.

I don't want to say its impossible but unless you have a very good mortgage broker that has connections at the banks and knows what docs they need (usually a book of papers from employer) its hard.



Thanks for the info..... There is no way I would be able to get a mortgage on my own - my income is not high enough for that

Posted 2/3/10 3:41 PM
 

dani731
Blessed!!!

Member since 1/08

3355 total posts

Name:
D

Re: 1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of long)

Posted by skinny

We were told repeatedly from bank after bank that unless DH was at his current job for 2 years AND have ongoing paystubs to prove it, we wouldn't qualify for a mortgage.

AND

I have a great job (and have been here for 5 years) and that still wasn't enough.

Even my own bank, who I have used for 10+ years wouldn't even talk to us.

It was nearly impossible for us to get a mortgage. I finally went to a broker and even then we had to jump through hoops for MONTHS. Sheer torture.



WOW.... this sucks Chat Icon

Message edited 2/3/2010 3:44:20 PM.

Posted 2/3/10 3:43 PM
 

Beth
The Key to your new home....

Member since 2/06

24849 total posts

Name:
Beth

Re: 1099 or self employed homeowners - I have a few questions regarding getting approved for a mortgage? (kind of long)

my boyfriend and me are both self employed- he also happens to be a mortgage banker with many connections (he was almost able to get my Dad a loan on a condo in FL with no kitchen and millions of dollars worth of liens against the building- I say almost b/c my Dad ended up with a rehab loan since he was out of time to close- court case with his wife's ex)

so it can be done- we are planning to buy a house in 6 months- if you want his info FM me- harder to get loans is his speciality

Posted 2/3/10 4:02 PM
 
 
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