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Mortgage Process & Self employment income Questions

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I am wanting to purchase a Home soon and wanted to know about U/W process with Self employment income.

 

I have two schedules-C. I am a licenced plumber and personal care assistant.

 

I report income for both and wanted to know if it is a safe assumption that the U/W's look at the Total income to base thier

decision on how much house I qualify for.

 

Or is only the larger $Amount of the two sources looked upon for the loan amount?

 

Thanks

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They will go by the total income on Tax Return (adjusted gross income). Then if I remember correctly they did an average. Purchased a home 2 years ago and my income was a combination of W2 and self employment. No issues. Good Luck!

Edited by janine510

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I also dont have 1099's as the profession for plumber is at obviously a different persons home every job, and the one personal care assistant job is for one private individual and no 1099 here as well.



Would I be better off (mortgage wise) if I asked for a 1099 when possible, or is this just not an issue

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I also dont have 1099's as the profession for plumber is at obviously a different persons home every job, and the one personal care assistant job is for one private individual and no 1099 here as well.

Would I be better off (mortgage wise) if I asked for a 1099 when possible, or is this just not an issue

 

 

What matters is what is reported on your tax returns. They will require you sign the IRS Form 4506-T and confirm what you show on your returns.

The 1099 form is what the person paying you is required to file, but you do not actually include the 1099 on your tax return, you just include that income.

 

Usually they will average the prior two years' self-employment income with a YTD to P&L statement. For W-2 income they use whatever the employer states is your income so long as you have two years in the field and it's not commission/bonuses (which are an average of prior two years as well IIRC).

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In my situation it was the last two years tax returns. They wouldn't take a YTD P&L. They will (or should) adjust your income for standard exemption and depreciation. If they don't, call another broker. I called a broker way back when I first started looking for a new house that told me, based on my tax returns, that I couldn't buy anything. He said he wouldn't even finance me for a trailer. :) I called another loan officer, AT THE SAME BANK, a week later who said I was qualified for a little over $4million. The swing was due to the first guy not adjusting for the massive depreciation I take every year plus my $500,000 standard exemption.

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