My husband is a Self-Employed Minister and we've been living abroad for the last 3 years.  We are looking at trying to buy a house for our return to the states. We are looking at making this our permanent US residence.  So, we went to a Mortgage Broker and are trying to qualify for a loan.

All our income is US Dollar, paid to us in the US on a 1099 form.  However, because we physically work overseas, we have claimed the foreign earned income exclusion.  Thus it puts our Tax Form 1040 with "no taxable income."  However we do still pay SE Taxes and Social Security on all our income to the US government.

The response we've gotten from the Mortgage company is that "because you have no TAXABLE Income on the form 1040, you do not qualify at this time for a loan."

Okay?.  Because we only pay SE Tax and not Federal Income Tax, we won't qualify.  I'm confused. So no other tax form matters but the 1040?  Then why do I have to file the others with the US Government?

If we decide to continue to work abroad, we will never qualify for a mortgage loan in the US?  

Is this only for an FHA loan or is this standard for all mortgage loans?  (i.e. Standard Fixed Rate Loan)

You have to have filed some form of tax reporting in the nation you were working in. You supply that data to show earnings. Since it's in US Dollars the tracking of this should be easy.

Now that your in the states you've got to be tied to some church, parish, temple, etc. That organization should start paying you on a W2 basis. If you "render unto Ceasar that which is his" you'll be able to get a loan pretty quickly.

If you are unwilling to become a W-2 employee your only hope is in time, lots of it, until you complete two years of United States tax returns or pay cash for a home.

Thanks for reading,

LoansbyJW