When it comes to getting a mortgage and being self-employed you can still get financing as long as you show income, that’s the moral of the story.
That being said let’s say you’re doing well in your business and you’re choosing to not make quarterly IRS payments. By choosing to not make quarterly payments you end up owing a lot of money at the end of the year if you show big income.
It should not come as a surprise to you likely will owe money at the end of the year. As a byproduct of that, it’s kind of your responsibility as an independent self-employed business owner that you are to make the quarterly payment to mitigate your risk.
To get a mortgage you must show a big income to qualify. That means showing as much income as you possibly can on paper which is going to come at the expense, of having to write a check to the IRS.
For example, you owe $30k at the end of the year. This debt will need to be paid off to get a mortgage.
An expensive scenario no doubt. So then you have to ask yourself is there so then you have to ask yourself is it worth paying $30k of taxes one time in exchange for the ability to buy a home that will increase my credit score, will make me wealthier throughout a result time, and will give me a larger tax break going forward?
One might argue that buying a house has far more advantages and is more of an opportunity and is more of an opportunity than the pain of having to pay the tax debt.
If the pain of the tax debt is more than the benefit of buying a home. Buy the home later, get a new accountant and get your financial house in order. It means having the advice of a good quality tax professional that can properly advise you while working in tandem with a lender who understands the intricacies of self-employment and how it specifically relates to borrowing power.
At the end of the day, you must show the income on paper. You might find a lender out there that’s willing to do a stated income loan or a no tax return verification type loan or a bank statement loan but if you find something like that closing on that loan is something else entirely. let alone the extremely high rates and fees that you will be paying as a byproduct of the risk which is probably going to be more costly over the course of time as it will course of time as it relates to mortgage financing. Simply put, pay the tax obligation and get a normal loan backed by Fannie Mae or Freddie Mac.
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