Self-employed income
Underwriters don't use your gross revenue. They use the taxable income on your return, adjusted.
The usual method
Most programs average two years of self-employment income from your tax returns. If the most recent year is lower, the underwriter usually uses that lower year alone. Non-cash deductions such as depreciation, depletion, amortization and business use of home are added back.
By business type
| You file | What counts |
|---|---|
| Schedule C (sole proprietor, single-member LLC) | Net profit plus add-backs |
| K-1 from a partnership | Your share of ordinary income, if the business shows enough liquidity or distributions |
| S corporation | Your W-2 wages plus your share of business income, with liquidity reviewed |
Bank statement loans
If your returns understate your cash flow because of legitimate write-offs, a non-QM bank statement loan qualifies you on 12 or 24 months of deposits instead. Expect a larger down payment and a higher rate.
The CPA advantage
Big deductions lower your tax and your qualifying income at the same time. If a purchase is coming in the next year or two, talk to us before you file. We look at both sides.
Reviewed by Mustafa Temiz, CPA, NMLS #2450795 · Updated November 2026
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