The Armstrong Team - Franklin MA Real Estate, Mendon MA Real Estate, Upton MA Real Estate

When you’re self-employed, it’s difficult to decide whether you are ready to buy a house. After all, your income might come in spurts instead of having a regular check every week or two. Being prepared for the mortgage process increases the chance that your application will be approved. Self-employed people have more hurdles to jump because of the nature of their income, even those that make six or more figures.>

Difficulties in Qualifying for a Mortgage

Since you’ve probably done a ton of research on mortgages and finding your dream home, you already know the basics—make sure your credit is good, how much down payment you’ll need and what you are able to afford. You may have a pretty good idea of what documents you need to provide and already have them ready. However, those pesky tax returns might come back to bite you.

Tax Returns

The biggest problem in qualifying for a mortgage when you’re self-employed is your tax returns. Most business people take every deduction allowed. However, while that’s great for your pocket since you pay less tax, it’s bad for applying for a mortgage.

Part of your self-employment tax returns is your expenses. You probably claim things like utilities, cell phones, business meals and travel and have a ton of depreciation. When a lender looks at the tax returns, it doesn’t add those things back in—except for depreciation. While you might make $300,000, your adjusted gross income on your tax return is going to be the number the lender looks at. If it’s $10,000, you’re not going to qualify for that loan.

Alternative Methods

You could amend your taxes or you could wait for two years and not claim anything on your taxes. However, that means you will be paying heavily to the IRS. Or, you could find a lender who does non-conforming loans. Some lenders are sympathetic to self-employed people and will use other methods of verifying income. Some banks may look at your deposits for a year instead. They’ll still ask for your tax returns, but will not use them to qualify your income.

Debt-to-Income Ratio

Your tax returns help lenders figure your debt-to-income ratio. While lenders are supposed to use your gross income, that does not hold true with self-employed borrowers. Lenders look at the adjusted gross income on your tax returns. That number is often lower than net income because of the expenses you deduct.

A lender adds up your debts and divides that number by your adjusted gross income. If you have a proposed mortgage payment of $1,200, a car payment of $650 and other credit lines, including credit cards of $500, you have $2,350 in debt. If your self-employed monthly income is $8,000, your debt-to-income ratio should be about 29 percent. But wait a second. That’s not the number on your tax returns.

If the adjusted gross income on the last two years of tax returns is $4,000 and $2,500 respectively, then your average monthly income is going to be $3,250 (add the two together, then divide by 2). That means your debt-to-income is actually 72 percent. The highest a lender will “give” you is 43 percent, though most will only consider your application if your debt-to-income is 39 percent not including your new mortgage and 33 percent including your new mortgage. In this example, a lender who uses deposits instead of tax returns will show a debt-to-income ratio of 29 percent.

If you are ready to purchase a house and want to learn more about qualifying for a loan, feel free to reach out. Together, we'll be able to get you into the home of your dreams, despite the hurdles.

This Multi-Family in Woonsocket, RI recently sold for $280,000. This style home was sold by The Armstrong Team - Costello Realty.

20 Spring St, Woonsocket, RI 02895


Sale Price

Approx. GLA
Offer Deadline 8/28/2019 @ 5:00PM. This exquisite 2 family Victorian home looks much like a doll house with elaborate trim & bright colors. This beautiful home has everything to offer and more! The 1st floor is a beautiful 3-bedroom,1bath apartment. A fully renovated kitchen includes newly tiled flooring, brand new upper lower cabinets & beautiful large hammered copper sink.2 bedrooms come off the kitchen. One in which may be used as a master bedroom.The formal dining room leads from the kitchen and is open to a massive family rm off the dining room, The formal sitting room is combined with an all seasons porch. Attached is a beautiful wrap around porch with ornamental spindles providing not only charm & authenticity but comfort & serenity. Most of the hardwood floors have been replaced throughout the down stairs. The upstairs apartment boasts a similar layout. Both the bathroom and the kitchen have been completely renovated. Welcome home!

18 Thayer Rd, Mendon, MA 01756



Full/Half Baths
This is the one you've been waiting for! This stunning colonial is set back on a scenic road in one of Mendon's most desirable areas. Be prepared to fall in love with this unbelievable 5 bedroom home with an outdoor paradise perfect for entertaining. Sit back, relax & enjoy the beautiful shaded pergola, heated inground pool with custom patio surrounded by beautiful nature, gardens & a tranquil water feature. This home is truly an entertainers dream with the home centered by the spacious gourmet kitchen featuring quartz countertops, oversized center island, gas cooktop, stainless steel appliances. Upstairs you'll find 5 ample bedrooms including an expansive master suite with sitting area, cathedral ceilings, walk-in closet & master bath w/separate shower & jetted tub. Laundry on 2nd fl. Walk-up attic has private office/teen suite. Finished basement with home theater & play area. Newer furnace, Irrigation, central air, alarm system & central vacuum. Great commuter location. Welcome home!
Open House
No scheduled Open Houses

Similar Properties

Two of the most important ingredients in a successful house-marketing campaign are competitive pricing and making a great first impression on prospective buyers. Although your real estate agent can assist in achieving both of those goals, keeping your home in "show ready" condition will be up to you and your family.

When your home is actively being shown, the process is not unlike a job interview. The main similarity is that you don't get a second chance to make a good first impression. Potential buyers have a mindset that's similar to that of a hiring manager: They are intensely focused on making the right decision. Since the last thing they want to do is make the wrong choice (or a less-than-optimal choice) it's up to you -- the home seller-- to present your home in its best possible light.

Other than keeping your home squeaky clean and your lawn looking as manicured as possible, it's also to your benefit to reduce clutter. A house that's filled with clutter will definitely send the wrong message to prospective buyers searching for their next home. Clutter takes many forms, so it often requires a concerted effort to identify and remedy it. Here are a few key areas to focus on:

Furniture clutter: Having too much furniture in a room or entryway can give visitors the impression that your home is cramped, too small, or disorganized. If you've had a tendency to add furniture to your home, over time -- without putting some pieces in storage -- then you may have inadvertently created a cluttered "look and feel" to your living space

Surface clutter: Have you ever noticed how things that belong in drawers, cabinets, and recycling bins often end up on tables, counter tops, and bookshelves? If that's taking place in your home, rest assured you're not alone! However, if you're preparing to put your home on the market, you'll make a much better impression on potential buyers if you remove as much surface clutter as possible.

Storage-area clutter: Although there's a lot of truth to the saying "Out of sight, out of mind," that usually doesn't apply to preparing your home for the real estate market! Serious house hunters are pretty thorough, and are generally going to glance in closets, basements, attics, and garages. So if you simply move your clutter to another part of the house, it will still be noticed! Granted, your clutter will be less prominent in storage areas, but it will still have a detracting effect on the overall impression your home makes. The solution involves a combination of strategies, including selling or donating unwanted belongings. In some cases, you might even consider renting a dumpster or calling a reasonably priced junk-hauling service to get rid of things you don't want and can't donate, sell, or give away.

It's not always easy to be objective when staging your home or evaluating its marketability, so an experienced real estate agent can provide you with invaluable guidance, advice, negotiating help, and marketing assistance

This Condo in Northborough, MA recently sold for $187,000. This Garden style home was sold by The Armstrong Team - Costello Realty.

59 School St, Northborough, MA 01532


Sale Price

Easy access to RT 20, Well maintained condo complex( Parliament court), Kitchen with Maple wood cabinets, updated light fixtures, lots of closet space, extra storage in the basement, plenty of guest parking space, new refrigarator, in built microwave,freshly painted and in moving condition, near by golf court , jagging place and park,Tran station, shopping center. Pets are allowed