Mortgage Tip RE: Self Employed Borrowers As we approach a new tax season, self employed borrowers who plan to buy or refinance in 2014 should be aware of what they are up against. When calculating the qualifying income for a self employed borrower banks are going to require the previous two years tax returns. The general rule of thumb is your adjusted gross income will be averaged over the two y...ears and used as your qualifying income. The banks will pull transcripts directly from the Federal government in addition to the returns you provide for verification purposes. If you show a declining income of more than 20% banks may either use the lower income without averaging OR turn the loan down due to an unstable income source. This often presents self employed borrowers with the choice between taking all write offs available leading to a lesser qualifying income and potentially not qualifying for a loan or paying more in taxes than necessary. Either way, knowing what you are up against ahead of time can save a lot of headache down the road. Feel free to contact me for a no cost, no obligation mortgage consultation.