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Howdy, Partner! How's the Income Look on Your Mortgage Application?
Howdy, Partner!  How's the Income Look on Your Mortgage Application?
 
I don't care how successful your S-Corporation or partnership may be.  When you go to get a home loan, there will be a new sheriff in town --- your mortgage lender.  So before your loan process gets hung up at high noon, I thought I'd let you in on a secret about how most lenders will qualify your income.  Let's go, amigo.  We're burnin' daylight.
 
Check Yourself
Most of what we focus on below will pertain to the self-employed partner or owner in an S-corp.  The widely-accepted definition of 'self-employed' is greater than a 25% ownership interest in any business entity.  So, look at your K-1 form if you don't already know.  If your ownership interest exceeds 25%, you can expect that your mortgage lender will ask you for not only your personal income documentation (as applicable); paystubs, W-2 forms, K-1 forms and personal tax returns (1040 Federal Tax Return), but also the Federal tax returns of the business entity itself.  In the case of a partnership or LLC, this will be a Form 1065 and in the case of an S-Corporation, this will be an 1120S.  "But wait!" you say, "They can claw the ... more

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