Bridget's Blog


Your Income Doesn't Count Unless It Can Be Verified!


I have gotten several calls lately from borrower's who are self-employed.

The first borrower I spoke to originally back at the end of 2009.  She had some credit issues and had recently started her own consulting company. Her tax returns showed lots of deductions, and therefore very little INCOME.

She called me to tell me that she has now been self-employed for over 2 years (the minimum required for most loans) and she had taken care of her credit issues.  (We had checked in several times since that first call).  Her income was well above what she needed to qualify for the home she is interested in.  She sent me her 2010 taxes with a note saying they haven't been filed......WHAT? Your 2010 taxes?

If your taxes aren't filed, I can't prove to an underwriter that you actually have income. 

Mortgage for Self Employed Borrower in Maryland

The 2nd borrower has been self-employed for 3 years.  The first year's income was very low, lots of outgo, not much income.  A really good accountant.  Her 2nd year was much better.  The problem comes in with actually paying the taxes owed in 2010.  They have not been paid and that means that the borrower is delinquent on a Federal Debt. 

This borrower is in a position where they will pay the taxes.  If not, the borrower would have to wait until an installment plan was reached with the IRS, then that debt would be added to the liabilities.  This could change the loan amount that one would qualify.

The Good News...If the credit is good and depending on the loan type, the borrower may qualify with one year's income.  Typically an FHA loan will require 2 years tax transcripts and the income will be averaged.

If you are tight on the two year minimum for self-employed income, you may need to wait until your 2011 taxes are filed, recieved by the IRS AND transcripts are available.  This could mean a delay of anywhere from 3 to 8 weeks!

Be careful of creative accounting if you are self-employed and interested in purchasing a home or refinancing!

When speaking with a self-employed borrower, don't just ask if they have been self-employed for 2 years, be sure to ask if that  income can be verified with Uncle Sam!  A loan may not be denied, but you can bet they may be delayed!


Warm Regards,

Bridget McGee  Maryland Mortgage Mama  NMLS# 196068  SWBC Mortgage.   410-960-2061 EHO or


If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure! 

If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest.  Please contact me at 410-960-2061.

Comment balloon 3 commentsBridget "Mortgage Mama" McGee • January 20 2012 10:01PM

Comments's (almost) funny when people don't think paying their taxes is important when they want/need a mortgage, huh?

Posted by Christine Hooks, Celebrating 25 Years in Real Estate! (Pino Agency) over 8 years ago

I am so naive that I think everyone pays their taxes before April 15th. Are you telling me some people don't?

Posted by Ellie McIntire, Luxury service in Howard County & Catonsville (Ellicott City Clarksville Howard County Maryland Real Estate) over 8 years ago

Chris, I think some people don't think they need to pay their BILLS when considering a mortgage!

Ellie, I think there are going to be more and more people delaying paying their taxes as the economy settles...When folks are looking for a home they must realize that filing and paying their taxes is kind of necessary!


Posted by Bridget "Mortgage Mama" McGee, Maryland Mortgage Mama NMLS#196068 (SWBC Mortgage 410-960-2061) over 8 years ago