Home Buying in 91401>Question Details

K99mom, Renter in 91401

Self employed w/large home office (40%)of my rent, utilities. This lowers my AGI on tax return. How does that AGI effect my chances for home loan?

Asked by K99mom, 91401 Tue Mar 15, 2011

I pay 2300/mo.for rent. I'm a dog trainer and need a large back yard. The land is 9400 sq ft, and the house is only 1119 sq.ft. Because my "home office" is the large back yard and 2 rooms in my house, I deduct 40% when filling out my tax return. This significantly lowers my Adjusted Gross Income. How will that effect my eligibility for a home loan? Self employed w/home office

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LUXURY HOME LOANS CA’s answer
That by itself shouldn't hurt you. There are several deductions we are allowed to add back to qualifying income to reduce your debt-to-income ratio. This puts you on a more equal footing with a W-2 borrower.

Happy funding, Rudi
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Tue Mar 15, 2011
Yes by taking deductions it does hurt what the banks consider true income. It is great for your taxes but not so good for your ability to buy a house
0 votes Thank Flag Link Thu Mar 7, 2013
K99mom,

Jerry is on the right track in the sense that you really need to have a loan professional look at your last two tax returns and give you a better idea of not only your AGI, but also the income the lender will use for qualification purposes. They are not the same.

If you would like me to do this for you, I am happy to help. There is no cost or obligation involved, but you will come away knowing a lot more about what's possible.

Thank you,

Rob Spinosa
rspinosa@rpm-mtg.com
0 votes Thank Flag Link Tue Mar 15, 2011
Usually you can add back whatever you deduct from your schedule C as business use of your home.
0 votes Thank Flag Link Tue Mar 15, 2011
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