Enter a home price and terms to see your real monthly payment, with taxes, insurance and mortgage insurance included.
If you are self-employed, you have probably run a payment calculator before and walked away more confused than when you started. Most of them ask for your income. That is the wrong question for you, and it is why the number they give you never matches what a lender actually says.
So this one does not ask. Put in a home price, a down payment, a term, and your best guess at taxes and insurance, and you will see the full monthly payment, all in. Principal and interest, property taxes, homeowners insurance, HOA if you have one, and mortgage insurance if you are under 20 percent down. In other words, the real number, not the teaser number.
Here is the part nobody explains. A lender does not care what your business deposits. It cares what it is allowed to count. On a conventional loan, what it is allowed to count is your net income after every write-off you took. So the same tax return that saved you money in April is the one that shrinks your loan in June.
I have had business owners sit across from me genuinely upset about this, and I understand why. You did what your CPA told you to do. You were rewarded for it. Then it cost you the house. That is not a personal failing. It is just how the guidelines read.
The way around it is not to change how you file. It is to use a program that measures income differently:
It will tell you the honest monthly cost of a house at a given price. That is genuinely useful, and it is the part most people get wrong by leaving out taxes and insurance.
It will not tell you how much you qualify for. Nothing on a website can, and you should be a little suspicious of any site that says otherwise. Qualifying depends on which program fits your situation, what your credit looks like, and how much you are putting down. On the non-QM side those three move together. The more you put down and the stronger your credit, the more options open up and the less the pricing costs you in points. Less down or thinner credit does not mean no. It usually just means a different program or a higher cost.
If you want the income side of the picture, run the numbers on my self-employed mortgage income calculator, which works out qualifying income from bank statements or 1099s.
Yes, for the payment side. A payment calculator is just math on a loan amount, so it works the same whether you are a W-2 employee or you own the company. Where it breaks down for self-employed borrowers is the income side, because a calculator cannot know which program a lender would use to measure your income.
Usually one of three reasons. The calculator left out taxes, insurance or HOA, so the payment looked lower than it is. The lender used your net income after write-offs rather than your gross revenue. Or the lender priced a program with a different cost structure than the one you assumed. The first is a math gap. The other two are program questions.
On a conventional loan they average your net income from the last two years of returns, then add back certain non-cash deductions such as depreciation. On a bank statement loan they total your deposits over 12 or 24 months and apply an expense factor. On a 1099 loan they start from the 1099 and apply an expense factor. Each one produces a different qualifying number from the same business.
Not always. Two years is the conventional standard, and there are situations where one year works. On the non-QM side, bank statement and 1099 programs do not use returns at all, so a strong recent year can carry the file even when the prior year was thin.
Yes, it generally prices higher, and I would rather tell you that up front than have you find out at disclosure. What matters is the comparison you are actually facing. A slightly higher cost on a loan you can close beats a better rate on a loan you get declined for. And plenty of borrowers refinance into conventional later, once their returns show what the business is really doing.
It depends on the program and on your credit. Conventional and government programs can go quite low. Non-QM programs generally want more down, and the amount moves with your credit score. Stronger credit lets you put less down. Lower credit means more down, or a higher cost in points. There is no single number, which is exactly why it is worth a conversation rather than a guess.
Want the number that actually applies to you?
Run whatever scenarios you want above, then call or text me at 704-890-7168 and we will figure out which program measures your income the way your business actually works. No application required to have the conversation.
Scott Hastings, NMLS #926762. Mortgages by Scott, a division of Arbor Financial Group. 121 N Main St Ste 202, Mooresville NC 28115. Equal Housing Opportunity. This page is general information, not a commitment to lend or an offer of credit, and no rate or approval is promised.
