I have never bought a house before and I am reading up on the house buying process. I just read that mortgage lenders will ask you to supply your tax returns (complete with all schedules) for the previous 1-2 years. I have a regular job that provides a steady income, but what would a mortgage lender think when they look at my tax return and see that I was trading tens of millions of dollars worth of stocks last year? Would that make them nervous and hurt my chances of getting a loan?
Makes them less nervous if your basic income provides adequate coverage. And if the additional income from trading has some consistent history that helps.
first, mortgage process is a dance... doc requirements depend on the processor and the investor to whom the mortgage will be sold.. provide basic returns, keep the detailed sched's out... let the doc processor ask you for additional docs... alternatively, if you are trading at a bank like ML, JPM, MS, whatever, they tend to provide full banking relationship that will include mortgages... they see your assets, and know your trading, so worth while to investigate...
Perhaps they would think you're full of sh1t? "I trade tens of millions of dollars of stock, but humbly struggle to borrow $xyz for a house" No acute offence intended, just saying wtf. Like how did you get borrow for your trading.
Have a good Avg for your past 2 years income from trading with a 25% down payment and you'll have a shot. That being said, around 60% of all home purchases since 2012 have been in cash compared to only 10% in 2005 If you don't have to pay a bank interest. Don't. Some prefer to rent and leverage their cash in the market instead. I rent personally for the roof over my head. I'm liquid and mobile. Housing is not liquid. If you want to get out, it takes time. Keep in mind from about 1895-1940 housing prices went down. They don't always go up.
You're clearly not a finance person. (Which is a compliment.) Having equity tied up in your home can, in many cases, not be ideal. A lot of companies will sell their real estate (even when that includes their own offices) and lease them back from the new owners. It might sound stupid, but this is often a very capital efficient way of managing their assets. (It also makes them more nimble.) Or, in other words, it sucks to be 'asset rich' but 'cash poor' when you can employ said cash in ways that beat out the returns said assets (real estate) was returning you. In a trader's world, that means if their expectancy on risk capital in play is higher than the annualized average growth of their local housing market, it might make more sense to have a few extra hundred grand in their trading accounts and a mortgage to service, than say, owning a home but missing out on the extra juice. Presenting yourself to the bank as 'self employed' and backing it up with proof of income over the last two or three years is usually enough to get the mortgage conversation started. That's not to say it won't be harder to get one approved, but at least you get the ball rolling... EDIT: To be clear though, I subscribe to the idea of debt == fragility (a la, NNT) so I personally don't like any debt especially if it's debt taken out to trade. I'm just saying from a "finance/business graduate" perspective that even when you have the money, it can make a lot of sense to still take out a mortgage.
Yeah, you're right. Not a finance person. If I were, I'd know that to fund a significant trading book and setup efficient stock loan is a bit more complex than borrowing as an individual to buy residential property. Irrespective, a monkey with a web browser could figure out all the answers to the poster's question, being it various forms low-doc loan availability, or showing sufficient documentation of self employment history to get a regular loan. Apologies for posting. I'll leave it to the big boys.
You don't need that much to have a year end total over $10M traded. For example, if someone traded $50K worth of stocks every day, with 250 trading days in a year, that would be a total of $12.5M traded in the year.
Get yourself a Mortgage Broker. You give them all the details and they then take it to the banks. The mortgage broker will probably get a better rate than you could, and it also might be lower than the advertised rates.