Buying A New Home/Daycare Question?

[littlemommy]

When our house sells, we will be moving to a bigger city. Homes in a comparable neighborhood to what we are in now are much more expensive there. More expensive as in double what we paid..

We can only use DH's income to get a loan, since I'm self employed and will basically unemployed since I won't have any kids at the time. My question is, if he doesn't qualify for a mortgage loan as much as we want, will they consider my potential income? If not, would it be possible to get a business loan to use? Since our home IS my business?

Just trying to think of some possible outcomes here. We won't make a profit on our home sale because we've only had it 3 years and have put a lot of money into it.

[cheerfuldom]

Most lenders will not consider potential income. Business loans can be tricky when it is also a home. Do you have anything else to show collateral on a loan? A car? Savings? etc? If you are paycheck to paycheck, it is going to be really tough to get a home loan, let alone any other type of loan. Sorry that I can't provide a more appealing future. I worked at a title company, a bank doing loans, just bought our second home and all this is very familiar. I have 5 years of steady income from childcare and excellent credit and it is still a challenge to get even a car loan (we just sold a pricey car, bought a much cheaper one and it was an issue just to finance the cheaper one!)

[DCBlessings27]

New home loan

I don't think that the bank will let you use potential income. We tried just to refinance (when loan interest rates were way down) last year. We didn't qualify for a 20 year refinance like I wanted because my husband and I had too high of a debt to income ratio. They only take into consideration your income that you're taxed on--since my income was only around 8K and my husband was only making 42K, we didn't qualify. We were only trying to refinance for around 120K. We also have student loans and car payments, which made it so our debt ratio was high. The loan officer even said that our credit cards had a balance--which put that against us. I pay our credit cards at the end of the month in full, but it didn't matter at the time. We have excellent credit--over 800 each.

If you can't get a loan to buy a house, could you rent one until you could show income?

[itlw8]

They took my last 3 years income tax returns as proof of income. While you need to prove it more they do count self employment income.

Go prequalify to see what you can afford to buy. You may need to look for a smaller home.

Some bank people get confused about family chikdcare taxes, You may need to show them why your expenses are high even though you would have those same expenses without the childcare. I believe Tom Copeland has written an article about it.

Much of it is based on your credit rating. My being self employed makes no difference in our getting loans.

[Crazy8]

They took my last 3 years income tax returns as proof of income. While you need to prove it more they do count self employment income.

Go prequalify to see what you can afford to buy. You may need to look for a smaller home.

Some bank people get confused about family chikdcare taxes, You may need to show them why your expenses are high even though you would have those same expenses without the childcare. I believe Tom Copeland has written an article about it.

Much of it is based on your credit rating. My being self employed makes no difference in our getting loans.

This is exactly what we were told when we were moving a few years ago - fortunately we were able to qualify on just DH's salary just so we could avoid all the extra paperwork!

[littlemommy]

The bank lady we worked with buying our first home told us that we wouldn't be able to count my income because at that time I will be starting over with my business (moving to a new town and having no current clients.)

DH has an excellent credit score, and no other debt...so at least we have those things going for us. Maybe when we actually go in to get pre-qualified we'll ask more details about using my income.