In the latest attempt to jump start the sluggish housing market; FHA is set to announce it is relaxing underwriting criteria for self employed/1099 borrowers.
Self employed borrowers will simply use the income from most recent tax filing (just one year) to qualify for their home loan.
They won’t need to income average their last two years of taxable income.
The (past) problem for self employed borrowers was the “lag factor” for calculating income.
For Example: If your borrower had high start up costs in 2009….but a hefty profit in 2010…the losses in 2009 would offset much of the gains for 010.
(If the borrower has not yet filed a 2010 tax return…the 2009 tax return would be used)
Now: The net income from the most recent (i.e. 2010) tax return can be used to solely to qualify for a mortgage.
Here are the basics:
- FHA Purchase Money …3.5% down
- FHA Refi …95% LTV (up to $417K)
- FHA Refi…85% Cash Out Refi (up to $729,750)
- Conventional Financing…Purchase or Refi …80% LTV (up to $729,750)
640+ FICO scores
This information was provided by:
Daniel Dobbs
Sr. Mortgage Loan Officer
American Commerce Mortgage
4676 Lakeview Ave #212
Yorba Linda, Ca 92886
(just 1 block from the Nixon Library)
Cell: 949 250-3981 Fax (714) 970-9777
DRE # 00986886 …..NMLS# 307631
