How does a DT qualify for a loan??

Discussion in 'Professional Trading' started by mephisto, Jun 25, 2003.

  1. mephisto


    How can a DayTrader qualify for a loan (be it car or home)? I'm trying to plan out a home purchase, but I can see the bank laughing already. Any ideas/suggestions/stories?? Please, no PAY CASH.
  2. I've been told you can apply for a home re-finance, ( I would assume the same could be used for a regular loan) and use "stated income" since you have to "estimate" your income?

    I guess this would assume you are going to be "net" positive at the end of the year.

    Check with your CPA to be sure. I am not an accountant.

    rttrader -
  3. Just be successful for >2 years like any other self-employed business. Most mortgage co's ask for the last 2 years' worth of 1040s.

    Also of course, sparkling credit and a larger down will tip the scales in your favor. On a home mortgage you want to put up 20% so you don't to pay that infernal PMI.
  4. lindq


    Typically lenders want to see at least 2 years of income statements as a self-employed person, no matter what business you are in. Generally they don't care if you are selling chickens or trading stocks. Although I wouldn't go out of my way to headline that you are daytrading. You are a securities trader, and operate your own business.
  5. Htrader

    Htrader Guest

    Don't emphasis the fact you are a daytrader. Just say you are self-employed and show them your past tax returns. I did that and had no problem at all getting my new car financed at a great rate, 0.9%.

    Of course, if you are not profitable...then you are out of luck.
  6. LOL...that reminds me of something Marty Schwartz (Market Wizard) said. He was trying to buy this penthouse apartment
    in New York.

    The place was like a million dollars, and he was gonna pay that
    cash, but the deal was, residents still had to pay something like
    $2000 a month for maintenance fee.

    Anyway, the people that ran the building didn't want to sell
    it to him, because they were afraid he wouldn't be able to keep
    making his maintenance fees.

    When he asked why they thought that..."because you're a day trader"
  7. Indeed. One day you're able to pre-pay 2 years of fees, the next day you may have to sell the furnitire on ebay to buy groceries.

    Gotta love this job, huh.
  8. jessie


    Almost any mortgage company will give you a no-income-verification loan with a minimum of 20% down. they are commonly used by self-employed people in the same position. Just refer to it as that, and they will know what you are talking about.
  9. Take the "stated Income" route. If you can pony up 20-25% down, the mortgage company won't bother you much regarding income because of the LTV (loan to value) ratio.

    If you can't get the 20-25% down, you can avoid the PMI by going with a 1st at 80% and a second in the 10-15% range with 5-10% down. The second will have a higher interest rate, however, it is deductible unlike the PMI.

    You'll pay a higher rate using the "stated income" loan. As others have mentioned, if you have a few years of 1040's which display your income, you may get a loan based upon that at a more favorable rate.

    Good Luck,


  10. Lenders can be more flexible than you think. Take the 'stated income' route until you have enough income history to qualify for a cheaper loan. Once you get a few years in, it gets substantially easier to get credit.

    I gamble in casinos for a living, and haven't had any trouble getting credit. It does help to have a relationship with your bank, though.

    #10     Jun 28, 2003