"But I make $60,000 a year!" No, according to your 2008 tax return, you make $12,000 a year and that $250,000 home in Sarasota might be just a bit out of your price range.
It's a bitter pill to swallow but there's a lot of pill-popping going on these days and the self-employed borrowers are feeling a bit sick to their stomachs. If only they would have obeyed Lending Commandment III:
III - THOU SHALT FILE THY TAXES WITH FORESIGHT
THE SIN - What am I talking about? A classic case of poor planning. As a self-employed individual myself, I can completely understand writing everything off on my taxes from my home office to the box of paperclips I bought last week. You want to show as little income as possible so you pay the least amount of tax. But of course, when you want to buy a home, you want to show as much income as possible. It's a painful catch 22, and I'm sure a lot of brokers in mortgageville are feeling your pain as well.
THE WIN - Plan ahead. If you know you are going to buy a home soon, claim more income if you are self-employed. Rental income, second job income, capital gains. Bring it on. True story. Had a borrower this year that was working for his dad's pool company. He wasn't making enough to qualify for the loan he needed, so I suggested he increase his W2 pay and decrease his monthly bonus. He did just that and in 3 months, he quailified for an awesome USDA loan with no problems.
Now, it may take a bit longer for some. Real estate investors need to have two years rental experience for the most part. And mortgage underwriters are looking at the past two years for a lot of types of income. Talk with your CPA as well because they can help you strategize on how to meet your goals. If you plan appropriately, you'll be on your way to saying "10-40 good buddy" in no time!