Prefer to talk in person? Find a mortgage specialist on Zillow
Profile picture for GEChicago

Self Employed Qualification: Using estimated tax payments in addition to 2 yr income

I switched from a w-2 employee to full time self employed in 2013. I showed some schedule C income in 2012 and 2013, but it really started to take off in late 2013.  

I wanted to investigate the possibility of getting a mortgage after paying my estimated taxes June and April 2014. Would that allow for me to use my 30 month average (2012, 2013, and jan-june 2014) or would I need to wait till I file my 2014s?
  • April 30 2014 - Chicago
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (7)

As a lender, I would need to see your 2012 and 2013 returns and calculate that income. There is a certain way to do it. We would also need a profit and loss statement. As long as you have 2 yrs self employment income it should be workable.Let me know if you need more info, [Spam/hyperlink removed by Zillow moderator, see our Good Neighbor Policy].
  • June 13 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

For self-employed a majority of lenders are going to look at 2012-2013. I am not sure too many underwriters will entertain what you made so far this year but it never hurts to ask.
  • May 30 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

It is unlikley your YTD 2014 will be a factor in your qualifying income, often you will need to submit a YTD Profit and Loss, if it shows a declining trend then your qualifying income might be reduced but with an increasing trend it typically won't be counted.

As Barb mentioned, qualifying on 2013 only is a possibility with Freddie Mac financing however it will require you verify the business has been established for at least 2 years, so depending on your start date in 2012 would determine when that option might become open to you.
  • April 30 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

A mortgage lender would be the best place for you to start. If you like a referral let me know. 
  • April 30 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If your Schedule C from 2013 is adequate for you to qualify, then you could do a Freddie direct loan. They generally only require 1 year of self-employed tax returns. There are a lot of details in between the lines here, but it would be worthwhile to have a lender take a look at your returns.
  • April 30 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Matt Laricy
I would speak directly to a lender. They would be your best bet. If you need a referral, I would be happy to help. 
  • April 30 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If it started to take off in 2013 what did your business tax returns look like?  Also what did you do prior to being self employed - are you in the same line of business as you were W2?

  • April 30 2014
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.