Your accountant spent two years lowering your taxable income. A conventional underwriter reads that number as your income. There are programs written for exactly this problem.
A business owner who writes off aggressively and a salaried employee can deposit identical amounts every month and receive completely different mortgage approvals. The reason is simple. Conventional underwriting reads the bottom line of your tax return, and every deduction that saved you money in April reduces the income a lender will count.
An underwriter averages two years of net income from your returns, adds back certain paper deductions such as depreciation, and works from that figure. A strong year followed by a weaker one gets averaged down. A business less than two years old often gets no credit at all. None of that reflects what you can actually afford, and it is still the rule on a conforming file.
A bank statement loan qualifies you on deposits rather than on returns. The lender reviews twelve or twenty-four months of business or personal statements, applies an expense factor, and treats the result as your income. For a borrower whose returns understate reality, the difference in approved loan amount is often very large.
Bring the statements before you bring the returns. The statements usually tell the better story.
Expect a larger down payment and a rate above a conforming loan. Expect the underwriter to care about deposit consistency, so transfers between your own accounts and one-time lump sums need explaining up front.
Some lenders accept a profit and loss statement prepared by your CPA, sometimes supported by a few months of statements. This suits a business with clean books and irregular deposit timing, such as a contractor paid in large draws.
A borrower with substantial liquid assets and little reportable income can qualify on the assets themselves. The lender divides eligible accounts across a set number of months and treats the result as monthly income. Retired business owners and people between ventures use this one.
Stop moving money between accounts in the months before you buy, keep business and personal banking separate, and talk to your accountant before the next return if a purchase is coming. One conversation in October can change what you qualify for the following spring.
Send Steev twelve months of statements and he will tell you which of these programs fits, usually the same day.
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