There are two major obstacles to getting a loan approval for self employed borrowers:
1) They need to be two years self employment to be eligible for most loans and
2) They cannot have substantial declining income from one year to the next
The trouble is that the very nature of being self employed means that you may have “substantial” swings in income year over year. As an example, I recently helped a realtor friend of mine who had a 25% drop in net income from one year to the next. Fannie Mae guidelines say that none of the income is eligible if there is decline in the income greater than 10%. 
< But here is the secret: There is an underutilized strategy to getting around the declining income issue. BY underwriting the loan using Freddie Mac guidelines instead of Fannie Mae guidelines, we are often able to use only one year of tax returns, thus eliminating the declining income issue from the equation
If you are looking for a lender with options such as this for you or your clients, give me a call. I’m happy to help!
~Joe Ashton
