A lot of paperwork is significantly more complicated if you own your own business, but your mortgage doesn’t have to be. We here at the Jay Dacey team are here to give self-employed borrowers a smooth and hassle-free mortgage process.
For mortgage qualification, you are considered self-employed if you have at least 25% ownership interest in a business.
There are five principal business structures: sole proprietorships, partnerships, limited liability companies, S corporations, and corporations. Each structure reports their income differently.
The following table outlines the minimum documentation (2 years) we would use to calculate your income:
Federal personal tax returns (1040s)
1040s, 1065s, K-1s
1040s, 1065s or or 1120Ss, K-1s
1040s, 1120Ss, K-1s
Note: Jumbo mortgages also require profit-loss statements for the current calendar year
If you issue yourself paystubs and W2s, be sure to let us know so we can include this income as well!
Can I use business funds for my closing costs or down payment?
Generally this is possible. Underwriting must perform a cash flow analysis to confirm that the withdrawal of funds will not impact the operations of the business. This can be done either through CPA confirmation or through analyzing the monthly cash flow on business bank statements.
What if my business is seasonal?
Since we generally go off the full-year numbers on your tax returns, seasonality is generally not a factor as long as your year-to-year history is consistent. If you have filed an extension on your taxes or there is a reason your tax returns are not satisfactory, we can use a profit-loss statement or confirmation from your CPA that your business is seasonal in nature.
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