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Daycare Center and Family Home Forum>Buying a Home?
Malmom 07:40 PM 01-14-2015
Forgive me if this isn't in the right spot.

My husband and I are hopefully going to be purchasing our first home this summer. We've been looking casually, just haven't found anything we like yet.

Of course, the way our income works with daycare, we get to claim so much that it makes our income low. Last year, I made $27k and by the time everything was claimed, I think I "made" $8500.

How bad will this hurt us when we go to get preapproved for a loan? My husband makes around $45k. Will they look at my $27k income, or will they look at the $8500? Obviously with the $27k, we'll be approved for a higher mortgage limit. And we all know I make more than the $8500 the IRS says I make. I just want to be prepared for when we are ready to sit down with a loan officer.

NoMoreJuice! 08:14 PM 01-14-2015
I just went through this when moving to our new house, and I have an awful story for you... I applied for mortgages through five different well known banks and savings & loans in the Kansas City area, and they all told me the same thing: my income as a home based daycare didn't count because we were selling the house that I was using for daycare. So basically they only look at what you will be making in the future once you start paying the monthly loan amount, and in the future they saw me making NOTHING because I would be closing my business. Nevermind that I would be opening a new one in the location I was purchasing, they didn't have proof and would not consider my future income. Luckily, my husband makes enough that we got a fantastic loan amount (thanks in part to my diligence caring for our credit score all these years).

I think some providers have had luck, hopefully they will chime in and let you know their experiences. Of course, if they are looking at taxes they will look at your adjusted gross income.
has_my_heart 10:35 PM 01-14-2015
I recently talked to a lender that suggested that I don't take any write offs for the two years leading up to purchasing my home. She said to bite the bullet and pay more taxes for a couple of years in order to show income and be approved... However I don't have a husband's income to show as well so that makes a difference but you can relate that to how your income will show up when you apply for the loan.
has_my_heart 10:36 PM 01-14-2015
NoMoreJuice, That makes me nervous. What if you'd had clients sign something stating that they would continue to bring their children or something along those lines in order to show that your income would continue to be the same? Hmmm...
spud912 06:16 AM 01-15-2015
We just purchased a house last July and it went great! Our circumstances were similar. My dh makes ~50k and I made 24k before taxes, $1400 after deductions. We were approved for up to 300k, although we did end up going for a lot less for lower payments. They did ask for a TON of info regarding deposits and the lender preferred daycare payments to be made in checks instead of cash. I also had to do a mid-year tax breakdown (which actually is helping me now that I'm rounding up taxes).
Ariana 05:40 PM 01-15-2015
We are going to be in a similar situation soon. As far as I know because my income is unstable they will not consider it for mortgage purposes. I am lucky my husband makes a lot....but it still sucks
kendallina 05:56 PM 01-15-2015
We bought a house last year in a similar financial situation. We had no problems whatsoever. They did only look at my taxable income, which was around 12,000 or so, which sucked, as you know, because I made much more. But, really, it was no problem at all. They never questioned anything, just made sure that I had all documentation.
We asked for a loan of 220,000 which was approved (we ended up purchasing a home for 195000).

I did make sure to have everything in order and professional-looking. The loan officer laughed a little because we had so much documentation and were so organized. Organization is not a trait I usually associate with myself, but we really wanted to be approved... Also, we have decent (but not perfect) credit scores, so I'm sure that helped.

Good luck! Buying a house is so fun!
Tags:buying a house, mortgage
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