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Mortgage loan with Schedule-C

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Mortgage loan with Schedule-C

I can't figure out what figures on the 2018 tax forms count as my business income. I plan on applying for a loan next year after filing my taxes at which point I will have 2 years of tax returns. I understand they take the average (of what) the 2 years as the gross income for the business. I also have a w-2 job which has history but would like to use the business income as well to qualify for more house.

 

Please point me to the right row I need to be looking at in order to know if it even matters. I know it was a profit but not sure if it's the gross less expenses or the profit only that's used in the calculation for qualification. 

 

Thanks.


Thinking out loud: Garden till Dec '17.
3 REPLIES 3
Established Contributor

Re: Mortgage loan with Schedule-C

If you're a sole prop then it's line 31 on Sched C, 2 year average

" EX 698 EQ 701 TU 707 MMS 705"
Message 2 of 4
Frequent Contributor

Re: Mortgage loan with Schedule-C

@MauiMan85209 wrote:

If you're a sole prop then it's line 31 on Sched C, 2 year average


Thanks for that!


Thinking out loud: Garden till Dec '17.
Message 3 of 4
Established Contributor

Re: Mortgage loan with Schedule-C

I concur with the previous answer with this caveat.  Lending to self-employed borrowers has become more streamline in recent years. Below is a rundown of the requirements:

 

1.) Conventional - Borrower to provide 2 year history of self-employment i.e. business license, DBA documents,  CPA letter. 2 years 1040's and the validation via 4506-T is no longer a hard guideline. We follow the AUS (automated underwriting system) Findings.  Meaning in most cases, the AUS will only require the most recent filed and processed 1040 and they validated via 4506-T. FYI, some lenders have overlays and will require 2 years regardless. Ask your LO upfront if they follow the AUS.

 

2.) FHA, VA and USDA - Borrower to provide 2 year history of self-employment i.e. business license, DBA documents,  CPA letter and 2 years 1040's and the validation via 4506-T by the IRS.

 

3.) NonQM - Borrower to provide 2 year history of self-employment (some programs allow only 1 year) i.e. business license, DBA documents,  CPA letter. Borrowers have multiple options i.e. 12 or 24 months bank statements (deposits used as income), full doc, asset depletion, etc.

 

Hope this helps! Best wishes to you.

Mortgage Banker - Since 1988 offering FHA, VA, USDA, Conventional, Jumbo and Portfolio Loan Products. Licensed in AL, AZ, CA, FL, GA, IL, IA, IN, KY, LA, MI, MO, NC, NE, NV, NJ, OH, OK, OR, PA, SC, TN, TX, VA and WI.
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