My fiancee and I are trying to qualify for a mortgage. She is full-time W2 employee and I am a small business owner. My 2012 profit in the business was significantly less then 2011 (more than 20% difference). This is something that the bank said would likely be a problem.

From the perspective of qualifying for the mortgage, would it be easier to qualify if I went and got a full time job with a regular pay-stub and W2? If so, how long would I have to be working at the job until the lenders would consider it as income relevant to getting the mortgage?

We live in and are looking to buy in Pennsylvania.

  • 2
    Generally, the last three years of personal income tax returns and possibly business income tax returns if you have incorporated your business will be requested. For W-2 employees, generally a letter is requested from the employer verifying employment, and a statement to the effect that you are likely to have continuous employment there for the indefinite future will be needed. So, still being in the probationary period might not be helpful. Commented Mar 13, 2013 at 14:26
  • Based on the w2 tag I assume you are in the US
    – stoj
    Commented Mar 13, 2013 at 22:49
  • @Dilip - thank you for the information. We knew already they would be looking at the tax records. I was not aware that they would seek a letter from the employer - but it makes sense that they would and I'll be sure to ask them the impact of being on any type of probationary period. Commented Mar 14, 2013 at 16:34
  • @stoj - Yes, we are in the US Commented Mar 14, 2013 at 16:34

1 Answer 1


Self employment is typically harder to qualify with than W2 income. In general the bank is going to want 2 years of tax returns. You will be asked to sign a 4506-T that allows the bank to get the records directly from the IRS. Self employment income will be averaged across the 2 years, I don't think a 20% drop in profits is large enough to cause concern but it might. I would plan on being able borrow against the lowest year just in case.

If you get a W2 job you will be able to count the income immediately assuming it is not a temporary position. The bank will ask for the offer letter.

If you have decent credit and 20% down, you should be able to get a mortgage either way. A W2 is typically less paperwork and you would get to claim your current income assuming that is higher than your past income.

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