Self-Employed Borrowers

How Underwriters Calculate Self-Employed Income

The behind-the-scenes math on returns, K-1s, and add-backs.

6 min readUpdated 2026Self-Employed Borrowers

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.

Self-Employed Income Estimator

Ballpark your qualifying income across programs.

Open calculators

Key takeaways

  • Add-backs help.
  • Two-year averaging is standard.

Frequently asked questions

Related articles

Get Started

Ready to make your move?

Get pre-approved in minutes or ask our AI mortgage assistant anything — no pressure, no obligation.