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[Faith_Hope]

My husband and I are preparing to purchase our first home. We both have w-2 incomes (from full-time jobs) and have self-employment income from side jobs. I receive a 1099 annually from my side job.  My husband on the other hand pays himself W2 salary from his side business and shareholder distribution (all documented on tax returns). Neither of us have recent losses in at least 4 years. My husband's side business roughly generates between $75-100k per year. My side business only generates about $25-35k per year. 

I am trying to prepare for the loan process and requirements for our self-employment income. I can provide contracts and they'll be able to source funds from my personal bank statements, as I am paid direct deposit biweekly from my client. 

In regards, to my husband's business: (1) We deposit his paycheck directly into our joint savings biweekly. We DO NOT intend on using any funds from the business for the DP or closing. All funds are in our Savings account and 401k. Now would UWs or LOs typically ask for just two years tax returns & p&l or would they also want to see the business bank statements?  Should we have our CPA certify the p&l and/or prepare a balance sheet or any letters? 

Any guidance is greatly appreciated.

[ShanetheMortgageMan]

If you are planning on utilizing conventional financing (vs. FHA/VA/USDA) then at this point you'll need:

1. Personal tax returns for 2019 & 2020 (if you use 2021's instead then you won't need 2019's)
2. Husband's business tax returns for 2019 & 2020 (if you use 2021's instead then you won't need 2019's)
3. W-2's for the years of the tax returns you are using (2021's W-2's usually will be needed by end of this month)
4. Your paystubs covering the last 30 days of pay (full time W-2 job)
5. Husband's paystubs covering the last 30 days of pay (for his business & full time W-2 job)
6. P&L's for both your and your husband's business for 2021 if you aren't providing your 2021 tax returns
7. P&L's through the most recent month in 2022
8. Business bank statements for the past 3 months for each business (statements for all accounts that business income is deposited into)
9. Your loan officer should be able to confirm your husband's business is currently operating by looking it up on the secretary of state website for the state in which the business is located and confirming it's "active" (or similar), if you have a current business license for your business then that can suffice as verification (there are a lot of other options as well, including your CPA writing a letter, evidence of business insurance, a website, recent billing invoices, etc.)

You can prepare the P&L, no need for a CPA or the like to do it.  You can create it from your own accounting software or it can be typed out in a MS Word document, there really isn't a specific format that is required.  https://www08.wellsfargomedia.com/assets/pdf/home-lending/profit-and-loss-statement.pdf is one I've seen a lot of borrowers use.

[JVille]

You may also want to write a Brief letter of explanation regarding the history of Each business. Stops UW from assuming or guessing about what's going on.