Self Employed - Which Schedule C Numbers for Pre-Approval?

PianoGuy · ‎09-20-2012

I'm trying to get some idea of how much mortgage I might qualify for.

I will contact loan officers soon to discuss pre-approval, but before I do anything I'd like to get

a rough idea of a starting point. I realize they will want all my tax returns (and request their own copies from the IRS), but

what I'm wondering is which numbers are used in determining my mortgage limits?

My FICO is currently 730.

Line 7 on my Schedule C (Gross Income after cost of goods sold) is $80,000

Line 28 (total expenses) is 52,000 (expenses include travel, business phone, internet etc.)

Profit 27,800

I realize my monthly ongoing expenses / credit cards etc. will be taken into account, I just want

to know which numbers are used as my "gross income" for qualifying.

Thanks in advance for any help.

clipperskipper · ‎02-21-2009

They'll use AGI, but savvy lenders may add all of those deductions back in. S/E tax is burying you, go LLC and reduce that tax burden!

PianoGuy · ‎09-20-2012

Thanks clipperskipper.

2011 happened to be kind of a tough year, sales were down a bit, and we did a lot of business travel (like $10,000 worth).

2010 had better numbers...

Line 7 gross income $95,000

Total Expenses $54,000

Line 29 profit $40,000

Hopefully 2012 will end more like 2010 (business is slowly trending up).

I know what I can afford a month for a mortgage (and taxes and insurance), but I need to find out what a lender thinks.

I guess I should just talk to some loan officers and see what they say.

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