Self-employed, what tips do you have for ensuring i qualify for a loan?

less write offs or consistent income etc..
By BigDave_BerringerTX55199 from TX Sep 26th 2013
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by William...

The days of the stated income are far gone!! What ever you claim on your taxes as income is the very income the lenders use for determining your ratios. So if your business generates $2M in a year, but you write off $1.99M in expenses, and your left with $10K, then it's the $10K the lender will use as verifiable income. There are a few exceptions where certain expenses can be added back in as income. Also, the lender will need to see a minimum of 2 years completed federal tax returns, and it's the income from the past two years for self employed borrowers that is used to determine your ratios. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714

Sep 26th 2013

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by TXMortg...

Hi Big Dave:The answer is both to a point. Underwriters look for a 2 year average to determine income. Plus the income must meet the qualifying ratio for the loan being applied for. Income increasing year over year is much better than declining income. Hope this helps.

Sep 26th 2013
by DaveMet...

Your bottom line on page 1 of your 1040 tax return for the last 2 years is the income the underwriter will use (subject to some adjustments on Schedule C). That figure should not decrease from 2011 to 2012, and your year to date net profit should also not decline.

Sep 26th 2013
by BigDave...

Thank you for the information!

Sep 26th 2013