Buying when you are self-employed.

The core problem

Agency underwriting reads two years of tax returns and uses your net income after deductions. If your accountant is doing their job, that number is as small as the law allows. You spend the year minimizing taxable income and then get penalized for it at the mortgage desk.

This is the single most common reason a perfectly solvent business owner is told they do not earn enough.

Three routes

• Standard agency underwritingIf your returns support the loan, this is the cheapest option and we start here. Some deductions — depreciation, for instance — get added back to your income, so the qualifying number is often higher than your bottom line suggests.
• A bank statement loanQualifies you on deposits into your accounts rather than tax returns. Prices higher than agency financing. Often the difference between buying and not buying.
• A DSCR loan, for investment propertyThe property qualifies on its rent. Your personal income is not part of the calculation at all.

What to bring to the first call

Two years of business and personal tax returns if you have them, and twelve months of bank statements. With those a loan officer can tell you within one conversation which of the three routes fits, and roughly what you qualify for under each — before you formally apply anywhere.