Tax Filing and Buying a Home

Self-employed homebuyers have lots of mortgage options.

Buying a Home as a Business Owner

Traditionally, self-employed buyers qualify for a home purchase based on their tax returns. Most mortgages look at income reported on the last year or two years of federal tax returns. The trouble some self-employed buyers run into is that their tax returns don’t accurately reflect their income. This is largely due to the tax deductions that business owners can take compared to employees. There are solutions for this hurtle by working with a lender.

Prepare Before Filing

Your taxes can be prepared, but not filed. This is a great time to have a lender look over your prepared tax returns and let you know what you would qualify for. Some home shoppers may choose to extend their tax filing if previous filed years allow for more home purchase options. Others may decide to take less deductions in order to still qualify for the home purchase that they want to make. There is also another option, that allows you to minimize the amount you will pay in taxes while still qualifying for the home.

Qualifying with Bank Statements

Business owners can file without worry by using a different loan type. Bank statements can be used to qualify rather than tax returns. These mortgages greatly expand what most self-employed people qualify for. This is a very common mortgage solution for business owners.

Takeaways

Working with a loan officer before you file your tax returns is a great time to make sure you are keeping your homebuying options open. Different home loan types can greatly expand what business owners are able to purchase. Getting prepared with a mortgage expert doesn’t cost anything.