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Pamela Berns, Sr. Mortgage Consultant

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Employment Changes/Self-Employment and “Other” Income Sources

March 13, 2019 By pamberns

PLEASE notify me of any employment change plans in the future or current employment that involves self-employment or second jobs.  It is important to let me know of separate/alternate sources of income (i.e., side business/hobbies with income, change of employer; recent raise/promotion; change of pay status, such as salary to commission, etc.). SELF-EMPLOYED BORROWERS have their income averaged over 24 months for qualifying income (two full yrs. taxes required) with all expenses written off on taxes is typically subtracted from gross income.  In general, all newly employed self-employed home loan buyers will need 2 full years of taxes.  Since it is not typically regular and consistent income, they will want to see the income on the taxes reflecting income going up year over year. They want to see that taxes are being paid on some of the income (not a loss taken for the year) as this reflects a successful business and income source that is trending upward.  They feel this is a good way to determine if the home loan will be paid back in a timely manner.  Income going down is not a good sign, but not an automatic no, but sometimes can result in lower income being used. 

Filed Under: Blog, Closing Loans

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