Rental Purchase - Self employed and can't get financing

[seanheinle]

I'm looking to purchase a rental for $55k - $65k.  3 months ago, I made the jump from full time to self employed consulting.  I went to take a Home Line of Credit and was denied because I haven't been working for myself for 2 years.

Anyone else run into this issue?  Will I see this with every bank?  Thought I'd ask here before I went applying else where.  If this is something I'm going to run into at every bank, I'm not sure what my options are.  Hoping this works out... price is right, close to home, good neighborhood.

[YttriumNitrate]

This issue is often discussed on BiggerPockets.com as one of the major pitfalls of quitting your day job and jumping into real estate full time (although that's not your exact situation).

In general, it looks like you are going to have a hard time getting a loan from any bank, and you should probably explore less conventional forms of financing (hard money loans, friends/family, etc.) although less conventional loans tend to significantly increase the interest rates you are paying.
https://www.biggerpockets.com/forums/12/topics/110533-getting-a-mortgage-with-no-w2-or-wage-income

[cchrissyy]

you're going to need 2 years of tax returns showing your self employment income.

since you made this switch mid-year, 2017 earnings as shown on your taxes might be too small. so you might not be able to buy until after your 2018 and 2019 taxes are filed. at least, not without a co-signer.  There's no point shopping this around to other banks. The only exception might be if your self-employment is exactly the same career as your W2 job. if that is the case, go check with a mortgage broker to see if they know of anywhere that would accept that.

the last thing to note, for later, is that once you start showing rental income in your taxes, you can use that to qualify for future mortgages/HELOCs.