For FHA loans, what are the rules regarding self-employed income?

FHA requires self employed borrowers to provide 2 full year's tax returns, all pages, all schedules, If your year to year income has increased, the lender will take the 2 year average, if it has decreased, then they will us the lower of the 2 years.. whatever you claim as income, after all deductions, that's the income the lender will use to determine your "Debt to Income" ratios.... so if you show a loss, then you won't be able to get a mortgage.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

2 years of verifiable business ownership and income history and your income is calculated off of your tax returns and not pay-stubs. home this helps.

2 year average of your income as reported on your federal tax returns. If you are self employed for less than 2 years, then 1 year income plus a year to date audited financial statement will be used to calculate income. If less than 2 years self employment, you will also need to have been in that type of business prior to your self employment. We are direct lenders here in NY call or email me for a Fast and Free Pre-Approval. Peter Botros 347-231-4444 or PBotros@OmegaLoans.net

Same as any other loan. Verification is done through a CPA, tax returns are verified though IRS 4506T. Income is taken based on two year average.

And when they calculate your income it's what you actually take home after all the business deductions, and not the gross amount you made that year. If you pay yourself a paycheck as a W2 wage earner it makes it a lot easier. Yeah it sucks for self-employed that make a ton of money but also have a ton of write-offs to avoid paying a tone of taxes but that is how it is in today's lending environment.

FHA always requires you to be self employed for 2 years, income is calculated off your tax returns and sometimes a YTD profit and loss statement is required as well. (Conventional loans occasionally only require one year of tax return and strong buyers may not have to be self employed for 2 full years.) For all loans, being self employed is considered to make the loan at least slightly more risky so usually the documentation requirements are quite stringent. I have a lot of potential customers who have situations similar to this: they "made $100,000 last year" but when I review their tax return they had $80,000 in deductions so their income is actually $20,000 for purposes of a mortgage. Generally taxable income is qualifying income, and the only common deduction that is added back to calculate income is depreciation which is not an out of pocket cost.