I am a self-employed MUSICIAN & buying a home seemed impossible. But, I finally did it! HOW?
You must bite the bullet andclean your tax returns for 2 years. In previous years, I expensed everything to receive a refund. However, my tax return would show a low NET (NOT gross) income. The goal is to show a high NET income by not expensing as much and to report ALL cash. For 2 years, I ended up paying about 8 or 9 thousand in taxes but my home was worth it!
You must get W2 employment meaning you must earn steady income and get a full-time job. The lenders will ask you to provide 2 months of pay stubs from your employer.
You must have good credit(700 or higher). I set all my bills to auto-pay so i am never late in payment. If you don't have good credit, you may need to have someone co-sign.
You must have a lower debt-to-income ratio. The less debt you have, the better your loan application will be. For example, if you pay $1750 a month for your mortgage and another $100 a month for an auto loan and $150 a month for student loans, your monthly debt payments are $2000 ($1750 + $100 + $150 =$2,000). If your gross monthly income is $5000, then your debt-to-income ratio is 40%. Lenders like to see the ratio below 43%.
The more money you put down, the better the loan you can have. If you are able to put 20% down, you may quality for a conventional loan which may not carry an additional payment of Mortgage Insurance. Also, the more you put down, the better position you are in for negotiating a lower interest rate with your lender and you will pay less in interest payments over the life of your mortgage.
Lastly, know your financial limits. Be realistic in the home you want to buy. You’ll want to determine how much house you can afford and are comfortable paying (two different things!). A good rule is that your total housing payment (including fees, taxes, and insurance) should be no more than 35 percent of your gross (pre-tax) income. For example, if you earn $60,000 a year, your maximum housing payment would be $1,750 a month.
One Nevada Realty Services, LLC is a full-service real estate company providing a wide range of benefits and services on your real estate transactions. Use one of our approved real estate agents and you will save time and money when buying or selling real estate. For buyers, our helpful online tools will allow you to search for a home through the MLS system, view area demographics, schools and crime statistics. For sellers, our helpful online tools allow you to find out what your home is worth and get tips on preparing your home for sale. Whether you are buying or selling a home, select one of our knowledgeable Realtors® and receive a quality representation for your transaction.