Self employed income is analyzed differently than someone not self employed who is pulling a salary or hourly income.
Lenders go by your 2 year's most recent tax returns. They take your NET income figures for the last two years and average them to arrive at an income figure. They add depreciation and depletion figures to your income and subtract meal and entertainment expenses.
There are slight variations depending on the type of self employment - Sole Proprietorship,LLC, S-corp, etc. but that is how it works for the most part.
This can create an issue sometimes, because your CPA is looking for ways to minimize your tax liability by deducting as much as allowable, while this actually decreases the amount of income a lender will let you use.
Your best bet is to speak with a loan officer well versed in helping selp employed borrowers and analyzing their income. I can help you with this if you like. Just give me a call or shoot me an email and we can touch base.
Loan Officer -NMLS #977416
WCS Lending, LLC
Toll Free: 866.936.5363 ext. 278