HOW TO QUALIFY FOR A MORTGAGE WHEN YOU ARE SELF-EMPLOYED
HOW TO QUALIFY FOR A MORTGAGE IN KALAMAZOO WHEN YOU ARE SELF-EMPLOYED (WITHOUT TAX RETURN HEADACHES!)
Do you run your own business, work as a 1099 contractor, or own rental properties in Kalamazoo, Portage, or Texas Township?
Yesterday, a successful small business owner walked into my office after touring a gorgeous two-story home near Texas Corners. Their company deposits over $220,000 in gross revenue each year into their business checking account. But when they handed their tax returns to a big box retail bank last week, the loan officer turned them down flat!
Why? Because their accountant did an amazing job writing off expenses, vehicle mileage, and equipment purchases to legally reduce their IRS tax bill.
The buyer looked at me and asked, “Jeremy, does writing off expenses to lower our taxes mean we can never qualify to buy a home in West Michigan?”
I told them straight up: “ABSOLUTELY NOT! You do not have to pay huge income taxes to the IRS just to prove you can afford a mortgage! You simply need a lender who understands SELF-EMPLOYED CASH FLOW AND NON-QM BANK STATEMENT LOANS!”
Traditional mortgage underwriting looks strictly at your bottom-line taxable net income on your Schedule C or business tax returns (Form 1120-S or 1065). If your accountant writes your net income down to $35,000, standard automated systems think you only make $35,000.
Think of qualifying for a mortgage while self-employed like reading your cockpit flight instruments. A novice only looks at the basic fuel gauge on the wing root. An experienced pilot checks the fuel flow computer, monitors the manifold pressure, and reviews the auxiliary tank transfers to see the real, true range of the aircraft!
Here is how we qualify business owners and 1099 workers across Kalamazoo County:
| Income Qualification Method | How Underwriters Calculate Income | Tax Returns Required? | Best Match For |
| Depreciation & Mileage Add-Backs | We take your net taxable income and ADD BACK non-cash paper losses (depreciation, amortization, business miles) | Yes (1 or 2 years) | Sole proprietors and LLC owners with high equipment write-offs |
| 12 to 24 Month Bank Statement Loan | We calculate your real monthly cash flow by averaging 12 to 24 months of business bank deposits | NO TAX RETURNS REQUIRED! | High-earning contractors, real estate investors, and local founders |
| 1099 Only Loan Program | We use your gross 1099 earnings with a standard expense factor | NO TAX RETURNS REQUIRED! | Freelancers, traveling nurses, consultants, and gig pros |
| DSCR | Income calculated of rent generated on the property | NO TAX RETURNS REQUIRED! | Investors purchasing rental property |
THE SECRET WEAPON: CASH ADD-BACKS
Many lenders reject business owners because their loan officers do not know how to read business tax schedules.
Under standard Fannie Mae and Freddie Mac guidelines, mortgage lenders can ADD BACK non-cash expenses directly into your qualifying income!
If your business wrote off $25,000 in equipment depreciation or $10,000 in vehicle mileage, we add those figures straight back into your income! You wrote off the expense on paper, but that cash never actually left your bank account!
THE BANK STATEMENT LOAN ALTERNATIVE
If your business write-offs wipe out your net taxable income entirely, you do not need tax returns at all.
With a BANK STATEMENT MORTGAGE, we collect 12 or 24 months of your business bank statements. We total your real customer deposits, apply a simple business expense ratio, and calculate your true qualifying income from your real-world revenue!
Yesterday, we reviewed that Texas Corners business owner’s files.
By adding back depreciation on their equipment and running a 12-month business bank statement cash-flow model, their monthly qualifying income jumped from an artificial $2,900 a month to over $14,000 a month!
We issued a rock-solid pre-approval letter within hours, and they wrote a winning offer on their dream home that very evening!
Never let an automated algorithm or an inexperienced loan officer kill your homeownership dreams. Let an expert structure your self-employment income, protect your tax write-offs, and land your next home with complete confidence!
Ready to see how much home your business revenue qualifies you to buy in West Michigan? Reach out today, call our team at 269.360.7109, and let us build your custom mortgage flight plan!
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HOW TO QUALIFY FOR A MORTGAGE WHEN YOU ARE SELF-EMPLOYED
HOW TO QUALIFY FOR A MORTGAGE IN KALAMAZOO WHEN YOU ARE SELF-EMPLOYED (WITHOUT TAX RETURN HEADACHES!)
Do you run your own business, work as a 1099 contractor, or own rental properties in Kalamazoo, Portage, or Texas Township?
Yesterday, a successful small business owner walked into my office after touring a gorgeous two-story home near Texas Corners. Their company deposits over $220,000 in gross revenue each year into their business checking account. But when they handed their tax returns to a big box retail bank last week, the loan officer turned them down flat!
Why? Because their accountant did an amazing job writing off expenses, vehicle mileage, and equipment purchases to legally reduce their IRS tax bill.