Q: I’m a stay-at-home-mom and I’m interested in starting my own home daycare business. I’d like to buy a home that would also be a place of business. Would someone of my status qualify for a home loan, or does there have to be a sufficient amount of years in that job field required?
My credit is good — I have no loans or bankruptcies — and my husband is just beginning to rebuild his credit from previous credit issues.
A: If you’re going to buy a home, and you’re self-employed, lenders want to see you self-employed for at least two years, with tax returns to back up the income that you are claiming. You may find it difficult to get approved for a loan that depends on your income before the two years have elapsed.
When you do go to apply for your home loan, remember there are opposite forces at work here. When you have your own business, you may want to boost your expenses as high as possible, so you pay as little in taxes as possible. But to qualify for a home loan, you’ll want to show as much income as possible.
If you want to buy a home sooner, you could qualify only on your spouse or partner’s income. However, his poor credit may get in the way of you receiving the best rate and fees available. For more information on what kinds of documentation a self-employed borrower needs to show, talk to a local lender.