The short answer to this question is that it can only be answered accurately by an experienced mortgage banker or broker with your completed application in hand. Let's assume an FHA loan for the moment. Generally, for a sole proprietorship, income from your last two years 1040's minus unreimbursed business expense is the income figure used. If the business is a corporation, partnership, or "S" corporation, business tax returns for two years are required, unless all of these are true: 1. The individual 1040's shows increasing self-employment income. 2. Funds to close do not come from business accounts. 3.The mortgage is not a cash-out refinance.
Feel free to call for further clarification or guidelines for FNMA-FHLMC programs.... more