C2C Employment considered self employed for Fannie / Freddie?

Question

I was recently offered a job after interviewing. They offered either w2 or corp 2 corp work. I chose corp to corp and created an LLC and signed a year long renewable contract as a single member LLC taxed as S-corp meaning I payroll myself. They drug tested / background checked and provided a laptop, a bit of training and guidelines.

I've been in the same industry since 2017, have incrementally made more money and gained more seniority by title.

Recently I applied for a Freddie / Fannie loan. They said I was self employed.

Somehow I can't imagine this is true. I feel like there must be an exception for this circumstance. If I hired another developer to work in my place my company would terminate our relationship. They hired me and and offered either c2c or w2.

Either way, if Freddie / Fannie's only measure is if I own 25% or more of the company and there are no exceptions for this case is it okay to assign a family member 75% of the company and reapply?

Thanks

Answer 1

Recently I applied for a Freddie / Fannie loan. They said I was self employed.

Somehow I can't imagine this is true. I feel like there must be an exception for this circumstance.

By self employed they mean that you are not a W-2 employee. You setup a C2C relationship, and formed a company. You decide how much of the corporate income is your salary. They have to do a lot more analysis to determine what your income really is. They can't look at the W-2 from last year, and recent pay stubs.

Self employed people always have more hoops to jump through to get loans.