So I've finally decided to try to buy a home. It took me a while after a divorce and a little bit of soul searching to get to a point financially and credit wise to be in a position to do it, but I still have a lot of worries. The main issue is that I am self employed. My fist couple of years in business were crazy slow and we pretty much barely scraped by with my wife pitching in and doing odd jobs for folks.
Let's face it, anyone who has to pay self employment tax, when you're first getting started, trying to figure out how to do things, etc you do what you can to keep it as low as possible, I probably could have reported 40k and let myself be raped by the IRS, but with expenses, money that I was screwed out of on contract jumpers, money I was putting into the business for tools, equipment, training, etc I just made it as simple as possible and claimed a meager but not outrageously understated income.
My last two years 2018/2019 of tax returns are only for about 20k per year. This year, business has been fantastic, I have already made about 50k net. I have spoken to a representative from quicken who wants 2018/2019 returns with schedule as well as a profit/loss statement for 2020 and bank statements for the past 3 months.
According to the representative they will take all of these into account but I am really worried that they will just average this year's 9 months into the last two years and I'll end up with a super low approval amount or not be approved at all.
I have a good credit score, 725, will be contributing about 10k plus closing costs. Looking to borrow around 160k.
Is this even going to be a possibility? Is there anything I can do to help my chances of being approved?