We have several self-employed borrowers who could not qualify for the properties they wanted in 2012 because their 2011 tax returns had too little income.
The borrowers all had better years in 2012 than they had in 2011, and they all intend to send us rough drafts of their 2012 tax returns in early January before they actually file them. We will then use those drafts to run numbers to make sure the borrowers qualify for their desired price range.
If the borrowers lack sufficient income on the rough drafts, the borrowers can then adjust their income (reduce their expenses within reason) in order to qualify for their desired price range.
Because many self-employed borrowers are very “aggressive” with their expenses, they have some legitimate leeway with respect to taking less expenses and showing more income.
In any case, we encourage self-employed borrowers with tight or high debt ratios to allow us to run numbers for them with their rough draft tax returns before they file them.
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646