When qualifying for a mortgage in recent years, many borrowers who received commissions took a hit against their qualifying income if they had unreimbursed expenses on their tax returns. That is no longer the case for some borrowers.
For conventional financing, we no longer have to factor in unreimbursed expenses for wage earners with less than 25% of their income coming from commission.
Previously, unreimbursed expenses were backed out of their income, ultimately lowering their qualifying income and how much they can get approved for.
We also have a change for other wage earners who file a schedule C (Profit or Loss from Business) or schedule E (Supplemental Income and Loss) with their income taxes. These tax forms are typically filed by people who have a business on the side, rental income, partnerships, etc.
If the income that was filed on either schedule C, or E is NOT being used to qualify for a mortgage, then we will not require those portions of the tax returns and will not hold any losses against their qualifying wage income.
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