If you’re a self-employed borrower, you might be interested to know about a unique opportunity that could significantly impact your qualifying income. Did you know that we allow a Net Operating Loss (NOL) to be added back into a self-employed borrower’s income?
Understanding the NOL Add-Back
Fannie Mae’s income analysis worksheet (Form 1084) provides a special provision for businesses filing IRS Form 1120. Specifically, a Net Operating Loss (NOL) can be added back into the self-employed borrower’s qualifying income, provided that the expense is not recurring. This can be a game-changer for many self-employed individuals looking to qualify for a mortgage.
What You Need to Know
To take advantage of this provision, there are a few key requirements and documentation that must be met:
1. Non-Recurring Expense: The NOL must be a one-time event. This means that the loss should not be something that happens regularly in the course of business operations.
2. Documentation: You’ll need to provide thorough documentation to support the claim that the NOL is a one-time event. This typically includes:
- Two years of business tax returns
- A letter from a Certified Public Accountant (CPA) confirming the nature of the loss
3. Ownership Requirement: The borrower must be a 100% owner of the business. Partial ownership does not qualify for this add-back provision.
Why This Matters
For self-employed borrowers, qualifying for a mortgage can sometimes be challenging due to the variability in income. By allowing a NOL to be added back into your income, Fannie Mae provides a way to potentially increase your qualifying income, making it easier to meet mortgage requirements.
How MortgageDepot Can Help
Our team of experienced professionals is here to guide you through the process, ensuring that you have all the necessary documentation and support to take full advantage of Fannie Mae’s NOL add-back provision.
If you think you might benefit from this opportunity, don’t hesitate to reach out to us. We’re here to help you navigate the complexities of mortgage qualification and find the best solutions for your financial situation.
Contact Us Today
Ready to explore your mortgage options? Contact us today to learn more about how we can assist you in leveraging Fannie Mae’s NOL policy to your advantage.