“I’m Self-Employed; I’ll need a Mortgage in the Future”

“I’m Self-Employed; I’ll need a Mortgage in the Future”



There are a number reasons some folks have difficulty getting a mortgage. Credit challenges are right up there, too much debt to be able to qualify especially when there are student loans, even the other extreme of too little or no credit and self-employed individuals.


We are in the 4th quarter of 2015, the time that decisions need to be made as to what the tax returns are going to look like and time to address future borrowing needs. Most everyone that files a tax return wants to pay the least amount of taxes possible that is for sure. But there is a tradeoff when it comes to the need to borrow money.


So many self-employed folks I speak with have difficulty understanding the problem. They constantly say how they bring in an abundance of income but that’s not the problem. I will immediately ask, “What was the net that you actually paid taxes on?” That is the number that we need to go by and along with it, an item or two we can add to that income.


I coach clients all the time to make sure the numbers look right and to make sure they can qualify for the mortgage that will be needed. There is going to be a tradeoff, show little income and not qualify for a mortgage or qualify for much higher interest rate where the net income doesn’t matter.


This quarter is the right time to work with a knowledgeable mortgage lender to make sure the income numbers will work for the mortgage that will be needed in the future.


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Joe Petrowsky, NMLS #6869

Right Trac Financial Group, Inc. NMLS #2709

110 Main St.

Manchester, Ct. 06042

Office: 860 647-7701 x116

Fax: 860 647-8940

Cell: 860 836-9294

Email: joe@righttracfg.com



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Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.

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Comment balloon 29 commentsJoe Petrowsky • October 06 2015 06:41AM


Joe, creative tax planning for the self-employed can be a huge barrier to obtaining a mortgage! It's like the old Fram oil commercial. Choose wisely! Enjoy your day!

Posted by Wayne Martin, Real Estate Broker - Retired (Wayne M Martin) about 4 years ago

Hi Joe.  No one wants to pay more taxes than they have to, but those self employed folks who are planning for financing a home purchase in the future need to show some income.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) about 4 years ago

Ahhh...those self employed challenges...some because income is in cash and may not find its way to the reported bottom line...

Posted by Sally K. & David L. Hanson, WI Realtors - Luxury - Divorce (EXP Realty 414-525-0563) about 4 years ago

Yes, planning for mortgages early in the process is a great idea, self-employed or not. For self-employed, the net is one of the key data points. Anyone looking for a mortgage in your area should call you!

Posted by Kat Palmiotti, The House Kat (406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty) about 4 years ago

You're right - this is the time when you can make adjustments.  I'm so glad I got my mortgage and loan for my biz before I started my new business.

Posted by Debbie Gartner, The Flooring Girl & Blog Stylist -Dynamo Marketers (The Flooring Girl) about 4 years ago

Hello Joe,  guidance for the future when it comes taxes is a valueable commodity.  Especially from a trusted professional as Joe Petrowsky .

Make it a great day Joe,   Mark

Posted by Mark Don McInnes, Sandpoint, North Idaho Real Estate - 208-255.6227 about 4 years ago

Good morning Joe.  Planning for the future and having someone to help you make those decisions is vital to getting that mortgage.  

Posted by James Dray, Exceptional Agents, Outstanding Results (Fathom Realty) about 4 years ago

Hi Joe.  The self employed can't have it both ways.  If you want to borrow money show your true income.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) about 4 years ago

Have had this happen several times. They have the income...but can't prove it!

Posted by Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400, Long Island Home and Condo Specialists (The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803) about 4 years ago

Good advice for self emplyed people thinking of buying a home.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) about 4 years ago

I coach clients all the time to make sure the numbers look right and to make sure they can qualify for the mortgage that will be needed......

Which is why you are so successful and get so many referrals Joe.

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) about 4 years ago

Joe,, I see this so often with self employed potential clients...great for you to coach wisely!

Posted by Ginny Gorman, Homes for Sale in North Kingstown RI and beyond (RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate) about 4 years ago

Good morning, Joe Petrowsky self-employeds are between a stone and a hard place..... pick your poison....so where are the no-doc programs!!!!

Posted by Barbara Todaro, Marketing Agent for The Todaro Team (RE/MAX Executive Realty ) about 4 years ago

Many self employed persons pride themselves on being able to write off the majority of their income. There is a downside to this and getting a mortgage is one of them. It is wise to speak with a lender early on to get their ducks in a row

Posted by Debbie Reynolds, Your Dedicated Clarksville TN Real Estate Agent (Platinum Properties) about 4 years ago

Joe Petrowsky , I've seen it happen over and over..  the Gross number is bragging rights.. and sometimes what they write off is bragging rights too.. but then they can't qualify for a mortgage. 

Posted by 1~Judi Barrett, BS Ed, Integrity Real Estate Services -IDABEL OK (Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745) about 4 years ago

Excellent advice for the self-employed;  you cannot have it both ways.  Self employed folks who plan to purchase a home in the future would do well to meet with an experienced loan officer long before they plan on making a purchase so they are going down the right path. 

Posted by Susan Haughton, Susan & Mindy Team...Honesty. Integrity. Results. (Long and Foster REALTORS (703) 470-4545) about 4 years ago

Good morning Joe. An important and informative post for self employed people.

Posted by Sheila Anderson, The Real Estate Whisperer Who Listens 732-715-1133 (Referral Group Incorporated) about 4 years ago

Joe Petrowsky This is a perpetual problem with the self-employed. It seems that the mortgage companies are lining up with the government to collect more taxes. There needs to be a BETTER WAY TO "QUALIFY" SELF-EMPLOYED PEOPLE THAN THE AMOUNT THEY PAID TAXES ON.

Bill Roberts

Posted by Bill Roberts, "Baby Boomer" Retirement Planner (Brooks and Dunphy Real Estate) about 4 years ago

Hi Joe -- I'm sure most of us in real estate have experienced this issue(perhaps even personally) --- it's beneficial to have a knowledgeable professional like yourself for the best possible advice.  

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 about 4 years ago

Excellent advice Joe. And, you being a most knowledgeable mortgage profesional you are definitely the one to call.


Posted by Rebecca Gaujot, Realtor®, Lewisburg WV, the go to agent for all real estate (Vision Quest Realty) about 4 years ago

I wish I could find some legal way to write off half of my income but it's not in the IRS code. I sock away six figures in my defined benefit contribution, and I still pay too much in taxes and there is no way around it whatsoever. Who are these self employed people who deduct everything? How is that not against the law?

Posted by Elizabeth Weintraub Sacramento Realtor Top 1%, Put 40 years of experience to work for you (RE/MAX Gold) about 4 years ago

Being self employed creates lots of complications, most especially in the mortgage process. Smart borrowers will trust you to help them.

Posted by Wayne and Jean Marie Zuhl, The Last Names You'll Ever Need in Real Estate (Samsel & Associates) about 4 years ago

Planning ahead with a knowledgeable professional is the way to go. This is a great reminder to those of us that are self employed. 

Posted by Debbie Laity, Your Real Estate Resource for Delta County, CO (Cedaredge Land Company) about 4 years ago

I have heard this story before Joe, so true. I have to admit it is worth it though, I like being my own boss.

Posted by Noah Seidenberg, Chicagoland and Suburbs (800) 858-7917 (Coldwell Banker) about 4 years ago

Joe tax deductions are both a blessing and a curse as you so well pointed out.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 4 years ago

Joe, I would imagine self-employed borrowers are the toughest to get approved.   I like the days pre-2008. 

Posted by Joan Cox, Denver Real Estate - Selling One Home at a Time (House to Home, Inc. - Denver Real Estate - 720-231-6373) about 4 years ago

This is very good reading for self employed people who will have mortgage financing needs.

Posted by Roy Kelley (Realty Group Referrals) about 4 years ago

"Income" is based on net figures.   If you make millions and then spend those millions, your "net" is zero.   If you have "zero" income; you can't buy anything.   Great advice to self-employed; work with a professional lender ahead of time if you are considering a home purchase using a mortgage.

Posted by DEANNA EARLY - - ( NMLS # 268590 ), Highest Ranked Mortgage Loan Originator Virginia (American National Bank & Trust) about 4 years ago

It's a wise person who plans ahead, and a wise person in your area will call you, Joe. I'd glad Roy Kelley re-blogged this today.

Posted by Lottie Kendall, Helping make your real estate dreams a reality (Compass) about 4 years ago