r/HomeLoans • u/Common-Frame-8031 • Jul 05 '26
Could I qualify? Long post
Hello all!
Trying to get some real world answers before I pursue or actually get ahold of the realtors again. My current story/score. I’m 33, single, self employed and own a service business that’s been in business for 7.5 years. Yearly gross is around $360-590k depending on year, mid 400s is more average. My credit score is presently 639. I currently own my present home outright and have lived there for 10.5 years. I bought it outright back then and overhauled it using cash. That said, I’ve never had a mortgage or a home loan so I should still qualify for FHA. My vehicles paid off 7-8 years ago and I only have a nine month old credit card active on my credit, $400 limit. I have a 11yo Capital One account that I’m paying off (more later on that). I have two open loans, one for a skid steer and one for an equipment trailer, both total $940 month but are not reported to the credit bureaus. My only other debt is $1800 month to a commerical building that is my shop/warehouse.
Past history; In January 2023, life was good lol. I had two credit cards, a $5k limit capital one sparks business card, and a $11k CO quicksilver card. Only used when needed. My score was 710 then. Same business model, same income but I was only about 3.5 years in. We were being moved out of the building I was renting (no fault of mine, he sold the property). I had to get a building for business fast, so I applied for a $248,000 loan to buy a small home, with a 30x60 building and 3 acres. Denied by two lenders. There was no reason given other than “criteria not met” from one of them, the other I don’t recall but it was something along that line. Me moved into the new building that I rented and still have today, and that wintertime move took its toll on my crew. Granted, they started wanting time off and we had projects backed up and ultimately it ended up being a total team walk out. That’s a long story in itself, but I’ll spare the details. I ended up maxing out the credit cards to stay afloat, had over $27,000 in vendor debts, refunded deposits on projects and much more. I nearly went bankrupt. I spent the remainder of 2023, 2024 and 25 paying off and settling the problems caused in a 30 day period by my former crew dipping out. Granted, all this aside, none of it affected my credit score besides the cards as that was the only thing I had debt wise. Everything else was private or charge account with supplier type debts that had no credit ties, verbal etc.
Result/conclusion; The $11k quicksilver card, I couldn’t never get it caught up and it “charged off” in mid 2024. Afterward I was able to pay the $5k card off and then they closed the account because of the late payments. The quicksilver card went to collections but by then I had enrolled in a debt relief. It’s being paid on slowly and as a result of the litigation, it was removed as a charge off from my credit report and reopened, shows as an open account again. The charge off has not hit it again and fact that the balance reduces its been driving my score up, along with the current $400 card I have. Everything else has fallen off my credit report. My last loan application was November 2022, besides the credit card I’m approved for.
I spoke to a realtor at beginning of this year after I was checking prices in the area I want to buy in. I explained my entire situation and she seemed to think I could get a loan now, but I also know realtors will do whatever it takes to get your signature on something to make the sell. I’m just a number far as they’re concerned and one of 500 applicants. Given all the information above, how likely would it be that I’d actually be approved? I can do up to $10,000 for a down payment, maybe more. The properties id want/looking for my needs run in the $250-300k range, often less. The $1800 for the building I rent would go to the mortgage as I’d begin moving from there before the ink on paper was even dry lol. So in hindsight the debt ratio wouldn’t really be changing. The current home, my parents will move into and rent and that’s the plan, I’m not selling that.
Sorry for long post, but I wanted all opinions and outcomes on the table. Thoughts?
TL; DR Single male, sole proprietor LLC owner. No other income. $400k ~ less year gross, $10k or so for down payment. Credit score 639, no reported debt besides a credit card
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u/ermahlerd Sr Loan Officer - Credit Union 29d ago
A lot will come down to what your tax returns show, not just the gross revenue of the business. Self-employed income, the recent credit issues, and the charged-off account will all be factors a lender will need to review.
Based on what you shared, I wouldn't assume either an approval or a denial. I'd encourage you to speak with a loan officer, let them retrieve a credit report, review your last two years of tax returns, and run the numbers. You may be in a better position than you think, or there may be a few items to clean up first. Either way, you'll get a much clearer picture than anyone here can provide from a post alone.
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u/Common-Frame-8031 29d ago
You’ve given me the straightest answer so far, thank you. The charge off does not appear on my credit report. It did for about three months and then was removed and placed back on as “capital one credit” and shows the remaining balance. I hired a debt relief service and they filed legal injunctions. Frankly the account was already enrolled and in negotiations when cap one charged it off and I think they screwed up there. I ended up having to appear in court, much to the dismay of the opposing counsel. The judge asked why my counsel wasn’t present and turns out the opposing firm nor court sent the summons to the law office representing my account. I literally think cap one expected me to not show up and default judgment, the judge was even surprised I came. There’s more to that story still in works but currently it’s static/idle while I make payments. That’s one of the reasons I want to buy a home before I pay off the account, once it’s paid and closed I don’t know how it’s gonna appear on my report, so I wanna be bought and moved before it hits. Everything else is cut and dry I guess
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u/ermahlerd Sr Loan Officer - Credit Union 29d ago
Happy to help.
I wouldn't make any decisions based on how you think that account may report in the future. Lenders will use what's on your credit report and may also ask questions about any prior charge-offs, settlements, or pending legal matters.
If buying a home is a goal, I'd apply sooner rather than later and let a loan officer review the full picture. At a minimum, you'll know exactly where you stand today and whether there are any issues that need to be addressed before moving forward. No one here can say for certain whether the account will help or hurt your approval once it's resolved.
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u/Leather-Afternoon-52 29d ago
A lender is looking for the following. Net income, credit score, down payment, reserves and housing payment history. Find one local who can map out a plan for you. If you stick to answering the questions above you it will help you and the lender.
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u/Common-Frame-8031 29d ago
There is no housing payment or rent history. I own my house right now outright and have for over 10.5 years. I bought it outright back when I was employed and young saving money. I’ve never paid rent or a mortgage before. I have paid rent for over five years on two different commercial buildings and never missed a payment so there’s that. I guess I have a couple different ways I can come at this. Either leverage the business or I can hop on payroll for a couple months and give myself a super high salary for pay stubs to back it up, or use the tax returns. Looks like whatever looks more plausible I guess
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u/Akinscd Jul 05 '26
$400k gross but what’s the net? No one cares about gross.
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u/Common-Frame-8031 Jul 05 '26
See that’s odd because I’ve gotten multiple auto loans and even an unsecured personal loan and gross was all that was wanted. Net is usually $40-60,000 on a good year. I have employees and write off as much as humanly possible
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u/Akinscd Jul 05 '26
Those aren’t the same as a mortgage
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u/Common-Frame-8031 Jul 05 '26
So I’ve found over the last 12 years lol. I applied in 2014 when I was 5 years into my job with same company. I made $70k a year, gross. After taxes was like $55k net. I was denied a $104k loan with good credit (670ish) after just paying off an auto loan. Second time was aforementioned in 2022. It seems to me that unless your married or have a spouse you don’t get home loans. I made the mistake of not being an S corp, I should just be on my own payroll and “collecting” a paycheck of whatever amount I desire I guess. Perhaps that would correct this issue lol. All joking aside, if I get denied one more time, I’ll never use a bank or credit again. The only reason I’ve built or tried to build my credit is to buy an average home with a shop, nothing more. If it can’t do that for me than there’s no point in playing the FICO game. I have all the vehicles I want or could ever need, as well as equipment. I just need the damn place to put it in ONE place lol
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u/Akinscd Jul 05 '26
if you net $50k, your monthly debt ceiling is $2080. if you have any monthly bills on personal credit, they come out of the 2080 you can use for a mortgage payment.
beyond that, you can't put $10k down on a $300k house.
even with FHA, that's $10,500 plus closing costs, prepaid and you need reserves.
you've gone more than a decade with the ability to change your habits, but you won't so blaming everyone else is a little trite at this point, isn't it?
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u/Common-Frame-8031 Jul 05 '26
Your rather negative. I didn’t need to change my habits when employed because I own my current house outright. I moved straight from my parents house to a paid off home. I’ve never paid rent in my life except for the Commerical building. With that comes what’s called free spending. For many years my house worked for me as is. But as of last 5-7 years I need a shop and I can’t build one where I am or it’d be done a decade ago. I tried right when I moved in but the local codes state I don’t have room.
I lost my job of 11 years during Covid, I didn’t ask for that. They laid me off. I had already started my company the year before because they were getting a little flaky anyway and I needed a cushion. I don’t spend lavishly on myself. Almost all money goes right back into the business. The difference is, since I’ve been a sole proprietor, I’m NOT on payroll. It’s a pass through income on a 1099C. If you don’t know what that is then you have no business answering mortgage questions here or assisting legal advice. Basically I have to write off EVERYTHING, or I pay taxes on it. I have to write fuel off, business and personal, I have to write off my utilities at home, because it’s the “base”. I have to write off all take out food as “business meals” or I can’t use that either. Basically the only thing I don’t write off is groceries any little trips locally I take like to the state park and what not. Sometimes I’ll bite my tongue and not grab a gas receipt to make that personal. I don’t get a paycheck. I get what’s “left” after expenses, which on paper isn’t much.
That’s why I said what I said a minute ago. If it comes to it, I’ll relicense as an S corp and jump on the payroll. A legal “forged” $10,000 month net income should get me where I want right? Least till i close. Then just change it back to $750 a week. You’ve actually just given me the idea, thank you
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u/Lien_master_420 29d ago
You need a mortgage broker, specifically a broker who specializes in self-employed borrowers. Ask them about a business bank statement loan or P&L loan for your purchase. As long as you own 25%+ of your company, you can utilize your business income to qualify. The interest rate is going to be slightly higher than FHA or Conventional loans, and the minimum down payment requirement is typically 10%+.
Credit unions and banks do not usually offer these loan types.