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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

eric1's picture
eric1 | Joined: January 4, 2009 03:52 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Sat, 02/07/2009 - 18:25 | Post subject:

jveenstra's picture
jveenstra | Joined: November 10, 2008 09:03 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Mon, 02/09/2009 - 13:18 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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!

Like | Dislike | Share | Posted: Thu, 02/12/2009 - 07:57 | Post subject:

jveenstra's picture
jveenstra | Joined: November 10, 2008 09:03 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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"

Like | Dislike | Share | Posted: Thu, 02/12/2009 - 11:01 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Fri, 02/13/2009 - 11:23 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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 [url=http://www.mortgagefit.com/refinance.html]refinance[/url] 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!

Like | Dislike | Share | Posted: Tue, 02/24/2009 - 15:02 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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?

Like | Dislike | Share | Posted: Tue, 02/24/2009 - 15:04 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Tue, 02/24/2009 - 17:14 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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?

Like | Dislike | Share | Posted: Sat, 03/21/2009 - 13:41 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Sun, 03/22/2009 - 22:29 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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?

Like | Dislike | Share | Posted: Mon, 03/30/2009 - 20:37 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Mon, 03/30/2009 - 22:05 | Post subject:

savior70's picture
savior70 | Joined: March 25, 2009 05:14 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Thu, 04/02/2009 - 04:43 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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?

Like | Dislike | Share | Posted: Thu, 04/02/2009 - 07:58 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Mon, 04/27/2009 - 11:09 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

elaborate on your situation, guest. what were you doing in the beginning portion of those 2 years that was not employment? were you just sitting around, were you in school, were you raising a child, were you simply unemployed? that will be key, honestly, in trying to assess just what might be available to you.

Like | Dislike | Share | Posted: Mon, 04/27/2009 - 14:04 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Well, here's what's happened since my last post--We applied for pre-approval (for an FHA loan) from a friend of a friend who happens to work as a loan officer at an out-of-state bank. We submitted all of our paperwork as well as that of our cosigner. 3 weeks later we find out that we shouldn't have even used that loan officer since FHA regulations require the lender to be in-state or an adjacent state from the location of the property. Now our application has to be transferred to an in-state branch of the bank for processing. My question is this: Should we even bother continuing with the bank application? Or is it time for us to look towards other lenders? Also, is there anything wrong with having an ongoing application with a bank as well as a mortgage broker? I just don't want to be penalized in any way. Obviously, part of it also is the fact that we've already sent in all of our paperwork and don't want all that effort to go for naught. (We also don't want to insult our friends who referred this guy at the bank...although, seriously, it took 3 weeks for him to know this information? He should have known and not wasted our time!) Let me know what you guys think.

Like | Dislike | Share | Posted: Sat, 05/09/2009 - 07:21 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

stick it out, but to answer the question about having 2 applications going at once - well, it's not the optimal situation, but if you feel the need, you can do that.

there are a lot of lenders who allow loan officers to do out of state loans and some who do not. the company i used to be with said i had to ship out my out of state loans, but i did a virginia fha loan without issue (and i am in connecticut)...so his error may not have been completely his own. it could have been misinformation by his company. we will probably never know the full details of the error, of course.

Like | Dislike | Share | Posted: Sat, 05/09/2009 - 10:08 | Post subject:

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