Ordinary Income Helps Self-Employed Borrowers at the Mortgage Desk

It is not necessarily more difficult for self-employed borrowers to qualify for a mortgage. Self-employed and traditionally-employed borrowers are subject to the same eligibility requirements. The tricky part is documentation. When it comes to providing paperwork to prove income stability, self-employed borrowers need to go above and beyond.

If you are self-employed, you will need to have an underwriter analyze a mountain of paperwork to determine how much of your company’s income you can use to qualify for a mortgage. Did you know that you might be able to use additional ordinary income from your business to get an even better loan?

What Is Ordinary Income?

At MortgageDepot, we want our clients to reach their real estate goals. We help our self-employed borrowers tap into all possible income sources to maximize their buying power. That’s why understanding your company’s ordinary income at the mortgage desk is so critical.

Ordinary income is any income earned from your company that is subject to ordinary tax rates. It is the pretax profit earned from business operations.

Using Your Company’s Ordinary Income To Qualify for a Mortgage

As always, there are rules to follow if you want to tap into your company’s additional ordinary income to qualify for a mortgage. Here are the specific requirements you need to know:

• You must own 100% of the company to use additional ordinary income.
• You need to prove that this income is consistent and stable.
• Your company must show an increasing sales trend.
• Your company needs adequate liquid assets on hand to support your cash withdrawal with no negative impact on business operations.

What Documentation Do I Need To Use My Company’s Ordinary Income?

Earlier in this post, we mentioned the plethora of paperwork that self-employed borrowers need to qualify for a mortgage. If you want to use your company’s ordinary income, you can add a few more documents to that stack. Here is what you need to bring to the mortgage desk to prove that your actions won’t cause havoc to your company:

• An accurate and updated Profit & Loss statement.
• Three months of your most recent business statements.

Contact Us Today!

At MortgageDepot, we are experts in overcoming our self-employed borrowers’ challenges. Contact us today to learn more about how to use your company’s ordinary income to your mortgage advantage!

Contact one of our loan consultants to learn more.