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When a lender looks at the tax returns of someone who works for themselves, they’re not just looking at how much money the person made. They’re looking deep into where this money comes from and how regularly it comes in. It’s important for the lender to see that the money…
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This section provides an overview of IRS tax forms that are relevant when assessing income for self-employed individuals applying for a mortgage. When you’re applying for a mortgage, and you’re self-employed, lenders will look at various IRS forms to understand your income. These forms are official documents that you’ve likely…
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When someone starts a business, the type of business they choose affects many things. This includes how they report their income or losses to the tax office, the amount of taxes they pay, how much money the business can hold onto, and how much of their own money is at…
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This guideline provides important information for lenders when they are working with self-employed borrowers. It explains how to evaluate a borrower’s income and decide if it’s reliable enough for a mortgage loan. When looking at self-employed borrowers, it’s key to understand that the income they report on their taxes might…
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When a person owns a business and wants to buy a home, the income they report to the IRS might not show the full picture of what they can actually use to pay for a mortgage. It’s crucial to look closely at the money the business makes and gives to…
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Fannie Mae provides a tool called the Income Calculator. This tool helps lenders figure out if you make enough money to qualify for a loan. You can use this tool whether your loan is being processed manually or with the help of Fannie Mae’s automated system, DU. After using the…
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This section provides guidance on how to document and qualify income a borrower receives from sources other than their job. This includes a wide range of income types such as money received from alimony, child support, boarders living in your home, and many others. When you’re applying for a mortgage…
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This guideline is all about how to qualify a borrower’s rental income. There are other policies that lenders need to be aware of when dealing with a borrower’s rental income. These include rules around multiple financed properties for the same borrower, general income information, income from rental property, minimum reserve…
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If you’re borrowing money based on your job or self-employment income, the lender has to check that you’re still working as late as possible in the loan process. This is called a verbal verification of employment (verbal VOE). For job income, this check must be done within 10 business days…
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IRS Form 4506-C is a tool that people, who are allowed to use IRS Income Verification Express Service (IVES), can use to get tax transcripts electronically. This is only allowed if the taxpayer gives their permission. If a lender is using a borrower’s income to qualify them for a loan…