Self-employed people often struggle to qualify for mortgages because lenders average income over two years and count tax write-offs against you. The video breaks down how different income scenarios affect your qualifying amount and why understanding your tax situation matters before applying for a home loan.
Today we're looking at calculating self employed income when qualifying for a mortgage. So this first example, the person earned a little bit more money two years ago. The most recent year that was filed on taxes, the income decreased. In this example, government won't give you credit for that previous year, just go off the 40. If the income's increasing, it's a 24 month average. If it stays the same, it stays the same. Also very important to note that it's not always just the bottom line on taxes. There are some things you can write off on your taxes, but then add it back on as qualifying income. That's something we help our clients with daily, so it's definitely worth having us take a look. Mo.
