11/14/2024 – Self-Employment Guidelines for Fannie Mae and Freddie Mac

Self-employed borrowers typically face stricter income documentation requirements when applying for a mortgage. Fannie Mae and Freddie Mac, the government-sponsored enterprises that purchase conforming and high balance loans, generally require a two-year history of self-employment. However, specific exceptions may allow borrowers to qualify with less than two years of self-employment or with limited documentation. Here’s a breakdown:

1. One-Year Self-Employment Exception

While two years of self-employment is the standard, Fannie Mae and Freddie Mac offer to accept one year for borrowers in certain circumstances. This exception applies if the borrower can demonstrate a stable or increasing income level and if other compelling factors support the likelihood of continued success in the borrower’s business. For example:

• Related occupation: If the borrower has been self-employed in the same field or industry for fewer than two years but has prior experience in the same line of work (i.e., a continuation of employment in a similar capacity), the GSEs may allow the shorter history.
• Consistent income: If the borrower’s revenue has been stable or increasing during the one year of self-employment, and the borrower can demonstrate a reliable stream of business, this may strengthen the case for the exception.

One Year of Taxes for Borrowers with Five or More Years in Business

For borrowers who have been self-employed for at least five years, Fannie Mae and Freddie Mac offer an alternative path to demonstrate sufficient income: they may accept one year of tax returns instead of two. This is a significant benefit for borrowers with a long-standing, stable business who can prove their financial capacity with just one year of tax returns.

The moral to the story is we can help people with 1 year in business, and we can sometimes use just one year of taxes to help a buyer qualify for a mortgage if they have been in business for over 5 years!

I am available all weekend if you need anything. Let me know if you have any questions or if someone is interested in buying a property. My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. My direct line is 661-291-2222. When you text me, please text (661-714-6258) or email me at Mike@AugustaFinancial.com.

But wait, there’s more!

Rates are like my weight! Up one day and down the next, but still way higher than anyone wants to see! I am on a diet now, so maybe we can get rates to follow! There is no magic shot or pill for interest rates, but if you all stop spending money and fire unwanted people, it could help! My diet is over on Thanksgiving day! LOL!  

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• We do loans in all states, so call me with anything you need.  
• Government Loans (FHA / VA/ USDA) are in the 5’s and 6’s.
• Conventional Loans up to $766,550.00 are in the 6’s
• High Balance Loans $766,550.01 – $ 1,149,825.00 are in the 6’s
• Jumbo loans above $1,149,625 are in the mid to high 6’s
• Bank statement loans - They are available with 10% down again, and larger down payments are in the 6’s.
• Profit and Loss Statement loans – 20% down – You don’t need bank statements, just a profit and loss statement!
• No income qualifier – 40% down with r serves In the 8’s!
• 0 down loans are in the high 6’s – 620 credit score min right now, up to $1,191,000.00.
• Private Money lenders - Hard Money Loans – 35% down!
• No Ratio Loans 30% down
• DSCR – Debt Service Coverage loans with as little as 15% down
• Bridge Loans - typically 7.99% with limited fees – and they get you where you need to go!
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice. The above are LA County Loan Limits.

Good News –

Bad News on Condos – There is nothing new this week except for two I had to take over because other lenders could not perform. We got four new fallouts in the office! We know we are a sure thing. Is the lender you accepted an offer from a sure thing?

All other naughty condos have been moved to MikeMeena.com. I will post updates here, but all the information on the naughty list is on my website. Just go there and click about, and you will find our most updated list.

Please let me know if you hear anything new on condos or townhouses.

I am still available all week if you need anything. Let me know if you have any questions or if someone is interested in buying a property. My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. My direct line is 661-291-2222. When you text me, please text (661-714-6258) or email me at Mike@AugustaFinancial.com.

Have a great day and an even better tomorrow. Please call me when you have a client who needs to borrow!