How does it affect a loan if you are self-employed and your year-to-year sales are slightly lower than the previous year, but net income is up?
I just got my taxes back to preview from the accountant and compared them to the previoius years and gross sales were down 1.2% but net taxable income was up 17.5%.
I assume they want to see a positive trend in your business but is that both for gross sales and for income?
There is a Form 1084 that is to be used to figure out income for self-employed individuals but there seem to be a couple different versions online. The first, which is the one I used, called 1084A says:
"Once the income available to the borrower for qualifying purposes has been determined, the lender should reevaluate
the “S” corporation’s overall financial position, using the Comparative Income Analysis (Form 1088) or other alternative documentation that FNMA considers acceptable."
I filled out a Comparative Income Analysis (FannieMae Form 1088) and at the end of the form it says:
"The Taxable Income Trend is: ___Increasing ____Level ____Decreasing"
Going off of Form 1088, the taxable income trend is increasing (1.6% from 2010 to 2011 and 17.5% from 2011 to 2012).
But there is another FannieMae Form 1084 I found online that says:
The following sources of income may be considered for qualification provides:
1. The borrower can document ownership and access to income:
2. The business has adequate liquidity to support withdrawl of earning, and;
3. The business has positive sales and earnings trends
Any lenders with experience in this or someone who has gone through this process when owning your own business (corporation)?
