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Discussion Starter #1
I stumbled across a few discussions and articles on the internet regarding the way tax returns and income are analyzed for self employed individuals looking for a mortgage. Basically, even though business write offs on schedule C lower your gross income, a lender can add your Section 179 deductions back into your income. It was also suggested that other expenses that are deductible (such as car expenses) can also be added back in. Any truth to this?

I know all about the increased difficulty for someone in my position, but if true, this would help me out quite a bit. I realize I can opt to not take any or as many deductions, but I really can't afford to do that. It makes saving money much more difficult. If it matters, I am currently renting, so will be a first time buyer. Will probably be looking at a traditional 30 yr mortgage, or an FHA loan. My debt is relatively low and well under control. My credit report and scores all look very good.
 

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A realtor or mortgage officer may be able to work some magic, but for all intents and purposes - taxable income is taxable income. I work at PNC mortgage so I'm around it all day, but not a mortgage officer - just a techie.

FHA is awesome, 3% down and you're GTG. If your property qualifies, a USDA RD loan is even better - 0% down and a super low rate and no PMI.

As long as you have proof of income they'll be satisfied for qualifying. Don't sweat it. Tax returns, bank statements, and if you've got them some kind of pay stub and you're golden.
 

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Discussion Starter #3
Well I have tax returns, and bank deposits. No paycheck stubs, since most of my income is cash or 1099. Some W2's, but whether or not that's enough is the issue. Of course, Business deductions give the appearance of a lower income which is the main stumbling block. I'm thinking an FHA loan will be my best option. Will look into USDA. I know it got real tough after 2008 to qualify for a mortgage, have they loosened things up at all?
 

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Dude you'd be surprised. While it may "seem" tough to qualify - that's only for a conventional mortgage. FHA, VA, and USDA loans are cake. 1099 counts as pay stub ;)
 

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Discussion Starter #5
Gotcha. Looks like USDA is for rural areas only but FHA is a possibility. But yeah, still got some more work to do before actually buying something. I got two recommendations on mortgage brokers. Guess it can't hurt to try.
 

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FHA is where we started, but the PMI is a killer..$$$$
We refinanced into a conventional loan 2 years later and dropped the insurance restrictions. Hell they even gave us some money back.
 

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Discussion Starter #7
Depending on what the payments are I could also pay above the minimum to get out of the PMI quicker.
 

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PMI is a mean bitch, but it's a result of the housing crisis. It helps prevent folks from getting in over their heads - and yes, what V6er said is spot on - most people refi after a few years or once the balance is low enough can drop PMI.

AFAIK, VA and USDA are the only loans that don't require it aside from some in house finance programs that builders offer.

USDA is for rural homes, the RD stands for Rural Development. Go on their website and check the address you're interested in though, I live in a town of 13k people and we're a city - casino, outlet mall, strip club, auto dealers etc and it still qualified!
 

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PMI existed long before the housing crisis. I remember a co-worker in the early 2000's buying a house by immediately taking out a separate loan to get him over PMI minimum. I don't remember the specifics (maybe he was only a short a little) but it worked.
 

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PMI is basically an insurance premium to the bank so they'll agree to write your mortgage. It may have existed before the crisis, but now its industry norm. What happens is you pay PMI until your loan balance gets to a certain point that the bank feels comfortable enough that you're going to pay your bill. Rather than have you pay a higher rate, or pay points, they just make you pay this nonsense for awhile.
 

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Discussion Starter #12
I understand PMI, but it sounded as though you were saying it was possible to take out a loan to cover the down payment.
 

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Old post I know, but you're still looking at home loans there is a program that will cover the 3% downpayment as a grant for FHA, USDA, and VA loans...just FYI.
 

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Discussion Starter #14
Thanks. I think I may wait a bit. Locally, this is a sellers market and terrible for buyers right now.
 

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Bad thing about putting less than 20 percent down (to avoid PM Insurance) is the lender won't typically allow you to hold property tax and homeowner's insurance liabilities outside an escrow account...so these costs are rolled in to your monthly payment.

Property Taxes aren't so bad, but the typical HO Insurance company sends the Mortgage Co. a bill 3 or 4 months in advance. Then, when you go to cross shop for another HO Insurance company...the premium for that year has already been paid two months ago. :banghead:

After having bought/sold seven houses in twenty years...if you can't afford to put at least 20 percent down, keep renting.
 

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Except in my area. We started doing some math and renting is actually more expensive than buying for comparable houses and that's including PMI, insurance and taxes.

It's pretty freaking ridiculous right now.
 

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Discussion Starter #17
For what I'm paying in rent I could afford something nicer, but a down payment has been an issue. Locally, housing prices have gone up a lot. We weren't hit that badly by the housing crisis, and with the influx of people and corporations prices have skyrocketed in some areas.
 

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Oh, I just need your advice on mortgages. The thing is, I want to borrow money from a bank in order to buy an apartment. The bottom line is that I have been choosing a bank for a very long time and I can’t make my choice because many of my friends have encountered serious problems because of the loan and I'm a little scared)
I found a site with reviews on different banks and I really liked the review on the site https://credit-10.com/lv/auto-kredits/. This is a very popular bank and it has a huge number of reviews, but I would like to know if one of you worked with them ... I need your advice!
 
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