Your write-offs shouldn't cost you a home
Business owners get turned down all the time because their tax returns show less income than they really make. Helping self-employed borrowers is my specialty.
Why self-employed buyers get stuck
Most lenders qualify you on the net income from your last two years of tax returns. Every deduction that saves you money at tax time also shrinks the income a lender can count. Plenty of successful business owners end up "qualifying" for far less house than they can afford.
The fix is a lender who knows how to read business returns, which add-backs are allowed, and when a different type of loan is the better path.
Ways to qualify
Full-doc, read correctly
Conventional and FHA loans using your tax returns, with every allowable add-back counted, such as depreciation, depletion and one-time expenses.
Bank statement loans
Qualify on deposits from 12 or 24 months of personal or business bank statements. No tax returns.
1099 or P&L loans
Use your 1099s or a profit and loss statement. Helpful when this year's income is stronger than last year's returns.
DSCR for investors
Buying rentals? Qualify on the property's rent instead of your personal income.
What to have handy
You won't need all of these. Which ones depends on the path we choose.
- Last two years of personal tax returns, and business returns if you file them
- 12 to 24 months of personal or business bank statements
- Year-to-date profit and loss statement
- 1099s, if you're paid as a contractor
- Business license or CPA letter showing how long you've been in business
Find out what you really qualify for
Tell me a little about your business. I'll look at the best way to document your income and come back with a plan. No credit pull to start.
Self-Employed Questions
We've got the answers you need. Didn't find yours? Reach out, we're happy to help.
How long do I need to be self-employed?
Most programs want two years of self-employment history. Some allow one year, especially if you worked in the same field before going out on your own.
Are bank statement loan rates higher?
Usually somewhat higher than conventional, because they're a different category of loan. For many owners, qualifying for the right home is worth it, and you may be able to refinance later.
Will you pull my credit right away?
No. We can start by talking through your income and goals. A credit check comes later, when you're ready to move forward.
Can I use my business bank account?
Often, yes. Business statements are allowed on many programs, typically with an expense factor applied or a CPA letter.