It's been because of this forum that my hubby and I are finally able to work on our lifelong dream of homeownership.
Our offer got accepted, contracts fully executed so now the ball really gets rolling. When we went for a conventional mortgage pre-approval, we provided our income via our W2's and paystubs in addition to whatever reserves we have on hand. However, hubby has a self-employed side job and I have two that require us to file Schedule C with our taxes.
Our businesses are just over 2 years old, but because of the pandemic we lost revenue in 2020 and had to work on paying off the expenses we still incurred from startup costs the years prior. Anyway, we didn't include the self-employed 'income' as part of our assets for approval. I should also note we were issued a pre-approval with DU verification.
It dawned on me yesterday that our tax returns paint a different picture in terms of the business loss, so I asked my LO about the requirement for utilizing tax returns or if we would still proceed with W2s and paystubs. I explained the situation and he said it should be fine as we're not trying to factor in self-employment income, but to pass the info along to another LOA who starts the underwriting process.
I've since emailed, but in the midst of emailing I've started panicking. We've come SO far and I've done SO much research and work to get to this point to have it potentially ripped away because of side-businesses we were launching. 
Now what I did find was a slew of information from The Selling Guide on Fannie Mae as well as our actual DU eligibility sheet, and it says that so long as the VOI/VOE can source and confirm income, then utilizing tax transcripts or returns is not a requirement. It also mentions that a 4506-C would only be processed for us post-closing for QA purposes if necessary.
Has anyone been in this situation before where you're a salaried W2 employee with a side business? If you are, did they discount your income and losses and only count your salary?
I should also mention that we've both been at our jobs for 13 years, hubby just got another raise, I'm due for one in December. Our FICO MMS is 702.
Thanks so much for your help with this.
