Self-Employed
How do lenders calculate self-employed income?
Answered by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
With tax returns, lenders use your net business income averaged over two years, adding back certain non-cash deductions like depreciation. Declining income gets averaged down; growing income may use the lower year to be conservative.
With a bank statement loan, they average your deposits and apply an expense factor instead. We'll calculate your income both ways and use whichever qualifies you for more.
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