Ask the Underwriter: A borrower qualifies using W-2 income, do I include the self-employment loss?
Question: I have a borrower who is looking to purchase a new home. They are employed by a large corporation and qualify for the loan using only their W-2 income. However, the borrower has a Schedule E loss on their tax returns from Self-Employment through an S-Corporation. If the borrower qualifies using only their W-2 income, do I need to include the self-employment loss in their debt-to-income ratio? Click for the answer!