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Answers (1)
- Pasadenan
- Contributions:21466
Primarily, they have you sign a form for them to access your tax returns direct from the IRS.
What is critical is what you report to the IRS and pay taxes on. They also are concerned about any existing debt, as your debt to income ratio is a critical factor. They typically look at 2 years of returns; but if you had one low year, you may want them to look at more.
As for new business? Normally not considered if you don't have 2 years of history with that business. But as long as the income shows up on your schedule C's and 1040, it would likely be considered. They will also need copies of bank account statements to verify this income actually came in.
What is critical is what you report to the IRS and pay taxes on. They also are concerned about any existing debt, as your debt to income ratio is a critical factor. They typically look at 2 years of returns; but if you had one low year, you may want them to look at more.
As for new business? Normally not considered if you don't have 2 years of history with that business. But as long as the income shows up on your schedule C's and 1040, it would likely be considered. They will also need copies of bank account statements to verify this income actually came in.
Self Employeed with Growing Business - Mortgage Qualification
I've been self employed for about 7 years and I've started and closed a number of businesses over the years (never a bankruptcy or major financial loss). Last year I walked away from a big project with the client owing me a ton of money which I'll likely never get. At the same time I started a new business which is now doing fairly well. Because of the huge loss from the one client last year my AGI was just shy of $50k. My new business is doing extremely well and has been growing from month to month. This year my AGI will be above $150k if not considerably more.
How will my income be determined from the two vastly different amounts? Will a lender take into consideration the current growth? What sort of documentation and requirements should I be prepared for?
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