What are the Three Levels of Income Verification for Self Employed Mortgages?
Author: Boychuk Mortgage Group |
Traditional
Traditional income is classified as verified income via your personal tax returns. This method of mortgage qualifying is the most challenging one of the three, supposing conventional “A” lenders will use your NET income after all expenses, write offs & other deductions.
Non-Traditional Income
With non-traditional income, your personal tax return is not a direct reflection of the income used like traditional income. Here, lenders will look at company bank statements and financial statements to verify your income via deposits. Because of the flexibility & tax advantage, this is the most popular category for many business owners.
Stated Income
This third option allows borrowers to piggyback off the traditional income verifications without fully verifying income. This is done by justifying the overall strength of the business, the industry of the business, past performance, years in business, and your application. While this option is quite strict, many call this option the “no income verification method”.