Frequently Asked Questions on Calculating Self-Employment Income for Mortgages by My Lender Jackie in California – home loans for self-employed

Is it hard to obtain a mortgage when you are self-employed?FAQs on Calculating Self-Employment Income for Mortgages

Self-employed borrowers do face a higher level of oversight during the underwriting process of a mortgage loan as compared to employees using standard pay stubs and W-2s. With the right knowledge on their side and an experienced mortgage broker, a self-employed applicant can close on a loan with very few hiccups.

What is the best lender to work with if I am self-employed?

The answer to this is it depends. The best lender for a self-employed mortgage applicant all comes down to the specific details of that applicant’s financial standing. And you may also find that there are several lenders offering very strong offers but each one is just a little bit different and the best one for you really comes down to your own personal preference.

This is why it is so important to work with a mortgage broker that is experienced in helping self-employed applicants obtain mortgage approval. They will already know the lenders most willing to work with your specific type of self-employment as well as the specific mortgage products that are best geared toward your personal purchase of a real estate property.

Is it possible to obtain a joint mortgage if only one person is self-employed?

It is still possible to get mortgage approval if two applicants are applying together for the same mortgage and one of them is a self-employed person. In some cases, this helps to obtain approval for a wider set of mortgage products.

Is it Mandatory to report any self-employment income?

It is always best to report any and all income that you receive to your lender even if it is from a self-employment side job. If you have a side hustle but you earn a majority of your income from a traditional salaried or wage-earning job you might not have to apply as a self-employed borrower but reporting this income could help you to qualify for better loan terms. You will still need to provide the proper documents to back up this income but it could only be helpful.

How is gross annual income calculated for self-employment income?

A gross annual income shows the net profits from self-employment. This means your income after all of your expenses. If you have filed taxes for the previous year then they should be easy to find because you have already calculated and adjusted your gross income. This number can be found on line 11 of the 1040 form.

Can’t I calculate self-employment income from my tax returns?

For a good estimate to put on your loan application you could look at line 11 of your 1040 tax form to see your adjusted gross income. You would then take this number and divided it by 12 to get a fair figure for your monthly income. However, this is best used only for an application. An underwriter will ask to look at bank statements to help verify these numbers.

If you are self-employed and have questions about your possibility of approval for a mortgage loan please contact me. I specialize in helping self-employed individuals find solutions to financing a real estate purchase.

For more information on all of your loan options in Mission Viejo and California please contact me anytime.

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