Short answer
The behind-the-scenes math on returns, K-1s, and add-backs.
Underwriters add back non-cash items like depreciation and depletion, then average two years unless income is declining.
Schedule C, K-1, and 1120S
Underwriters add back non-cash items like depreciation and depletion, then average two years unless income is declining.
Business liquidity
Distributions must generally be supported by adequate business cash flow.
Key takeaways
- Add-backs help.
- Two-year averaging is standard.
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Sources
Program rules change and individual lender overlays apply. Verify specifics with the agency or with a licensed NexGen Capital advisor before relying on them.
Reviewed by NexGen Capital Corp
Written and reviewed by the licensed mortgage team at NexGen Capital Corp, a Florida mortgage brokerage (NMLS #1766649). Verify our license on NMLS Consumer Access.
Last reviewed: 2026
This article is educational and is not a commitment to lend or an offer of credit. Speak with a licensed NexGen advisor about your own situation.