Ask the Residential Mortgage Underwriter: Q: What % of a business does someone need to own to be considered self-employed?

 

Q: What percentage of a business does someone need to own to be considered self-employed? How is their income determined?

A: Any borrower who owns greater than 25% of a business is considered self-employed. A self-employed person’s income is calculated by averaging the net income after expenses from the previous two year’s tax returns. If the income dropped in the most recent year, then the qualifying income for the loan is the lower amount in the most recent year rather than a two year average. This same method is used for any employee whose commission income is greater than 25% of their overall income.

 

December 22, 2012 by · Leave a Comment

About James

James A. Williamson is currently the Sr VP of Sales Development for Shelter Lending Services (formerly Fairfield Mortgage). James joined Shelter in 1994 and was the company's top Loan Officer in GA for 20 straight years helping over 2500 families finance their homes. James now oversees an incredible group of Loan Officers in Atlanta while further building Shelter's Atlanta business.

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