Self-Employed and 1099 home buyers face additional challenges with income calculations to qualify for mortgage loan financing. Conventional, FHA, & VA lenders require all pages of tax returns, business & personal. Many self-employed applicants do not qualify for a variety of reasons, or they don’t qualify for a large enough loan they desire. For self-employed borrowers looking to get a mortgage, below is a list of documents that lenders will require the applicant to provide.
Income Documents Requirements
- 2 years work history (1099 employees are considered self employed)
- 2 years tax returns (all pages, business and personal)
- *1 year tax returns if the company is over 5 years old (conventional only)
- Year to date P & L (Profit and Loss statement) *watch out for declining income
- Current Balance Sheet – company should be stable
- 3 months business bank statements to support income (all pages)
Lenders use the average of 2 years tax returns to determine your qualifying income, unless your income is declining. If income is declining, they use the current year’s lower income. The current year’s financial statements (Profit & Loss, Balance Sheet & 3 months of bank statements) must support your income to qualify. If the profit & loss statement shows declining income, or the bank statements do not support the revenue, or the balance sheet is showing financial distress, your income calculations and loan qualification can be adversely affected or declined.
JZ Mortgage will help you review your loan application and income to determine your eligibility and loan options. Many self employed borrowers do not qualify by full income calculations which are required for conventional, FHA and VA loans. We have excellent Portfolio Loan Programs available which do not require any tax returns to qualify. Some of the more popular alternative Portfolio Loan Programs are the 12 month bank statement, the asset only and the Investor no income loans. There is no cost or obligation to get pre-approved with us and find out all of your available loan options.