Self Employed Home Loans in Spokane, WA
Spokane · Spokane Valley · North Idaho
If you write off everything your accountant tells you to, your tax returns understate what you earn. That is the whole problem. Will Flanigan knows how the income is actually calculated and what to do when it does not fit.
Spokane runs on small business. Contractors, trades, real estate agents, medical practices, consultants, truck owner operators, restaurant owners. Plenty of them make good money and still get told no by a loan officer who opened their tax return, looked at the bottom line, and stopped there.
That is not a credit problem or an income problem. It is a calculation problem, and it is solvable more often than most self employed borrowers have been led to believe.
Why the numbers look wrong
Lenders do not use your gross receipts. They use net income after the deductions you took, averaged across a period of time, with certain items added back. Depreciation, depletion, and some one time expenses can generally be added back because they did not actually leave your bank account. Others cannot.
So two business owners with identical deposits can qualify very differently depending entirely on how their returns were prepared. The deduction that saved you on taxes in April is the same deduction working against you in the loan file. That tradeoff is worth understanding before your next return, not after.
Sole proprietors
Schedule C net income drives the calculation, with specific add backs. How the return was structured matters more than the revenue number.
S corporations and partnerships
Both your W2 wages and your share of business income come into play, and business returns are usually required alongside personal.
1099 contractors
Treated as self employed even when it feels like a regular job. Expenses claimed against that 1099 income reduce what counts.
Multiple entities
Several businesses, or a business plus rental property, is common and workable. It takes a loan officer willing to read all of it.
When tax returns will not get there
Sometimes the returns genuinely do not support the purchase, and that is where a lot of loan officers end the conversation. There are documented alternatives designed for exactly this situation.
Bank statement programs qualify you from deposits across a period of months rather than from your tax returns, which suits a business with real revenue and aggressive write offs. Profit and loss programs use a prepared statement, sometimes with accountant verification. Asset based qualifying works from documented reserves rather than monthly income. Debt service coverage programs qualify an investment property from the rent it produces instead of from your personal income.
These programs carry different pricing and different requirements than conventional financing, and they are not the right answer when a standard loan would work. They exist for the file that standard guidelines cannot fairly measure.
The order matters. Will calculates your qualifying income from the actual returns first. Only if that falls short does an alternative program enter the conversation, and he will tell you plainly what the difference costs you. Leading with the alternative before doing the math is how self employed borrowers end up in a more expensive loan than they needed.
What to have ready
- Two years of personal tax returnsAll schedules, not just the first two pages.
- Business returns if you file themFor S corporations, partnerships, and corporations.
- Year to date profit and lossEspecially if this year is running stronger than last.
- Business bank statementsTwelve to twenty four months if a bank statement program is on the table.
- Proof the business is activeA business license, a state registration, or a letter from your accountant.
If your accountant is already preparing this year's return and a purchase is coming, that is a conversation worth having before the return is filed. Will can tell you what the lender will see.
Common questions
How long do I need to be self employed to get a mortgage?
Two years is the common expectation, though there are situations where a shorter history can work, particularly when you moved into the same line of work you were previously employed in. It depends on the program and the strength of the rest of the file.
Can I qualify if I write off most of my income?
Often yes, though possibly not through conventional financing. Bank statement and profit and loss programs exist for this exact situation. Will runs the standard calculation first so you know what the alternative is actually costing you.
Do I need two years of tax returns?
Usually for conventional and government backed loans. Bank statement programs work from deposits instead, which is the main reason they exist.
What if last year was down but this year is strong?
Declining income gets scrutinized, and a recovering year needs to be documented rather than explained. A year to date profit and loss statement and an honest conversation about what happened both help.
Are bank statement loans more expensive?
They generally price differently than conventional financing because they carry different risk. Whether that difference is worth it depends on your situation, and it is a question you should be shown the numbers on rather than talked into.
Can I use business funds for my down payment?
Sometimes, with documentation showing the withdrawal does not harm the business. It is a common question and the answer depends on the entity type and the program.
I was denied somewhere else. Is it worth trying again?
Frequently yes. A denial often means the file was measured one way, not that it cannot be measured another. It is worth a second look by someone who works on self employed files regularly.
More on home loans in Spokane
The calculation done properly, from your real returns, before anyone tells you no.
William Flanigan, Loan Officer, NMLS #210976
NEXA Mortgage, LLC, NMLS #1660690
Licensed in Washington, Idaho, and Arizona. Arizona Mortgage Banker License #BK-2006218.
Equal Housing Lender.
NMLS Consumer Access: https://www.nmlsconsumeraccess.org/
Corporate Address: 5559 S Sossaman Rd Bldg #1 Ste #101, Mesa, AZ 85212
Phone: (509) 461-5069
Nothing here is tax advice. Consult your tax professional about how deductions affect your return. Neither William Flanigan nor NEXA Mortgage, LLC is affiliated with or acting on behalf of the U.S. Department of Veterans Affairs, the Federal Housing Administration, the U.S. Department of Housing and Urban Development, the U.S. Department of Agriculture, the Washington State Housing Finance Commission, or any government agency. This is not a commitment to lend. All loans are subject to credit and property approval. Programs, rates, and terms are subject to change.
