My husband and I are trying to get a home equity loan and looking for a company that will consider capital gains as income. Our house appraised for $195,000. We owe $29,000. We are behind on no debts. Credit score of 660 to 670 through myfico. I know that's not great. My income is $80,000, my husband's farm income is -$218,000 for 2008, which is the only figure ickenLoans will consider. He has a capital gain of $246,000 which we had to pay taxes on, so the IRS definitely considers it as income. What they are telling us is he has a $218,000 loss, I have a $80,000 income, so we have a loss of $4000 per month, so no income at all. They won't consider our financial statement at all where we own a piece of property worth $600,000 which we owe about $90,000 on. They are not interested at all in our assets, just my income and his income, and will not consider his capital gains, which we also had in 2007, except it was much, much larger then, and we ended up with a tax bill of $60,000 b/c of it. But quickenloans still says that is not income. I asked them to tell the IRS that, b/c they sure figured it as income. The capital gains comes from my husband's buy/sale of cattle, and that is just the way he does business. That will also happen again this year. We take the profit from the buy/sale of cattle and buy hay/feed/equipment in order to create expenses on our farm to try and cut down on our tax bill. Can you think of a bank/mortgage company that might even consider capital gains as income, not just write us off as someone with no income?
While your husband's capital gains will be treated as income, it is the net amount that he declares on his tax returns, that will be considered as his income for the year. For example, if he made a total of $100000 in a year but had expenses of $120000, he would show a net loss of $20000 for that year. It is this net amount that lenders will look at, not your assets or cash flow.
According to your question, it looks like you are applying for the mortgage jointly and therefore both of your incomes are being combined. It will be best if you consult with a qualified tax professional to see how to file your returns (individual or married filing jointly). You might have a better chance of getting the loan based on your income alone.
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