Mortgages have always been more challenging for self-employed purchasers. As lenders, we have to analyze personal and business tax returns to determine what income is allowable for a mortgage.
- As lenders, we look at net-income for self-employed customers. Most of us that are self-employed or on commission tend to think of our income as what we gross but that’s not how an underwriter will view income.
- Write-offs can be fantastic as a strategy to pay less in taxes but they can be a huge challenge if there isn’t much net income to base qualification upon.
- All pages of the tax returns are necessary
- If a business shows a significant decrease in revenue from the previous year, it can result in a declined loan.
- YTD Profit and Loss statement should be consistent with previous years earnings. If not, there should be a letter of explanation as to why not
We’re happy to answer any additional questions you may have about self-employed qualification. We truly enjoy working with self-employed Borrowers.