You know the benefits that come with making your own decisions & never having to report to a boss. However, there are some disadvantages to generating your own income, especially when getting approval on a mortgage.

The infamous stated-income loans disappeared in the post-recession era of mortgage lending. Although they are making a small comeback, there are still a couple of things a self-employed borrower needs to consider.First, tax returns filed with the IRS: Self-employed people typically report their gross income minus expenses to generate a net income, but it is the net income that will be used for mortgage qualification. Basically, the self-employed borrower must decide what is most important - qualifying for a larger mortgage or paying less in taxes.  

Second is the question of declining income. Lenders are typically required to average the qualifying income using the two most recent years' reported to the IRS. If there is a substantial decline in income, it must be addressed. If the borrower can demonstrate that the decline was due to a one-time loss, then it's still possible to get loan approval. Fairway has a program which can qualify a self-employed borrower off of only the most recent year's reported income. Getting a mortgage approval is certainly not impossible as long as you have someone experienced at the helm. If you have any questions at all regarding mortgage qualification, please call me. I have many years' experience in working with the self-employed small business owners.  

Sincerest wishes for a Happy, Healthy & Prosperous 2015!