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Mortgage Qualification

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timmis1127
Regular Contributor

Mortgage Qualification

 

1. Mortgage Credit Scores:  732

2. Credit Negatives: None
  • Miscellaneous
    • 10 years established credit
3. Gross Income.  Gross income (before witholdings, medical/dental, 401k contributions), per your IRS tax returns, is what is important when qualifying, not net income. 

$95,000

 
4. Source of income.  Where is the income coming from? List each source.
  • Employment: Self Employed
  • W2: $38,000
  • K1- $40,000
  • Rental Income: $20,000
5. Monthly debt payments

Student Loan Payment: $771
 
6. Employment (for those who are employed). 
  • Type of employment: self-employed
  • How long: 2 years
  • How long: 10 Years
7. Assets/Reserves. This is to determine how much you could potentially have as a down payment and also as reserves to help qualify (for example if your debt to income ratio is high this could help qualify you anyway).
  • Savings
  • Checking
8. Location:  This is to determine govt guaranteed loan limits, what special programs might be available for you, how much property taxes & homeowners insurance will likely be, amongst other items.
  • Michigan
  • County(s: Oakland
  • City or zip(s): Not Sure Yet
9. Property Description: 
  • Is it a single family house,
  • 10. Property Value.: Not Sure yet
  • Purchase transaction: Looking to purchase around $350,000

11. Occupancy
  • Primary residence 

 

Because I am self employed will the bank look at my AGI not my Gross?

3 REPLIES 3
DallasLoanGuy
Super Contributor

Re: Mortgage Qualification

adjusted.

 

we can add back depreciation though

 

Retired Lender
Message 2 of 4
ShanetheMortgageMan
Super Contributor

Re: Mortgage Qualification

AGI (adjusted gross income) from line 37 on IRS Form 1040 is never used.  It may coincidentally be the same as your qualifying income, but an underwriter won't ever use that line from someone's tax return to determine qualifying income.

 

If your qualifying income is $95k, payments of $771/mo, then with 5% down on a $350k sales price in the NW Detroit area, the debt to income ratio would be in the low 40's, which would qualify.  However, I as detailed in my other reply to you, self-employment income calculation isn't so straight-forward.  Your loan officer should be able accurately calculate the self-employment income for you, as well as should be able to "show their work" to you if you ask.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 3 of 4
Anonymous
Not applicable

Re: Mortgage Qualification

The banks don't look at post tax income, insurance premiums, 401k contributions, etc.

They only pay attention to taxes if you owe and are in a payment agreement, and/or have tax liens that require additional payment.
Message 4 of 4
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