Self-employed income
Also called: 1099 income, business income, schedule c income
Income from self-employment, generally qualified on net figures after business deductions rather than gross receipts.
Lenders typically work from tax returns and use net income after deductions, often averaged across a period and adjusted for certain add-backs such as depreciation. Aggressive write-offs lower taxable income and therefore lower qualifying income.
History matters. Programs generally want to see the business established over a documented period, though there are exceptions where prior employment in the same line of work supports a shorter history.
Related terms
- DTI (Debt-to-Income Ratio)The share of your gross monthly income taken up by monthly debt payments, including the proposed housing payment.
- Non-QM loanA mortgage outside the Qualified Mortgage rules, using alternative documentation such as bank statements or asset depletion.
- UnderwritingThe lender’s review of your credit, income, assets, and the property to decide whether the loan can be made.
- DSCR loanAn investment-property loan qualified on the property’s rental income rather than the borrower’s personal income.
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