Posted by Christopher Wolfe on August 20, 2003 at 13:07:54:
Lenders always look at GROSS INCOME.
gross income, or is it net income ??? - Posted by Cas
Posted by Cas on August 20, 2003 at 12:13:45:
Hello,
I have a question.
When lenders review the income of self-employed borrowers, the lenders look at the Tax Returns. But which income they use in determining the qualifying income ?
Do they use the GROSS reported income as the ?qualifying income? ?
Or do they use the NET reported income as the ?qualifying income? ?
In other words, if a self-employed person GROSSED $200,000; but NETTED only $30,000 (this is just an example), which figure would the lender look at to determine ?qualifying income? ?
Anyone know ?
Thanks
Re: gross income, or is it net income ??? - Posted by Chireen
Posted by Chireen on August 22, 2003 at 02:04:39:
Can’t speak for all Lenders and all loan programs, but TYPICALLY you would take your Total Income, less expense, add back in depreciation, and that’s the number that is used. So if you made $200,000 and after expenses were deducted you only show $30,000 and you had nothing to depreciate, then the Lender would use the $30,000.
And TYPICALLY they would take that bottom $ amount for your last 2 years, average it, and that’s the final amount they would use for your income.
Re: gross income, or is it net income ??? - Posted by dk
Posted by dk on August 20, 2003 at 16:08:22:
In your self employed example, it depends. I underwrite second mortgages, we look at your personal gross. The business income on schedule “C” or “E” depending on your entity may be $200k at the top, but if the bottom line of that schedule is 30k and thats what you carry forward to the 1040 line 12 or 17, thats “your gross” and thats what we look at.