Qualifying for a mortgage when you are self employed doesn’t have to be hard. It all comes down to being able to document income. For those that get a w2, it’s easy to document income. For those that are self employed, your income comes down the what is on your tax return. In some cases that can be easy, in other cases, you may need to use other means to document income.
Self employed people may fill in a Schedule C or may have a corporation and file a S corp tax return. Both can be used to document income, we will need to see a two year history. We may also need a profit and loss statement along with bank statements. As long as your income is stable and increasing, your tax returns should work. Remember we use your bottom line (net profit after expenses). There are some expenses that we will add back to your income, such as depreciation and mileage.
In some cases your tax returns may not show enough income to qualify for the mortgage you want. There are other options that may help you. We have some programs that use your 1099’s as income if you get 1099’s. In that case we will use 90% of your 1099 income. There are also bank statement programs that you can use. With bank statement programs we look at your deposits into your business bank statements.
If you aren’t sure what you may qualify for, talk to your loan officer and we can work through options for you. In some cases, you may easily qualify for the home you want. Worse case, you may need to wait a year. Either way, we can make a plan so you can qualify for the home you want.
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
