Tag: business loss

When Does a Business Loss Need to be Counted?

Question: Are we required to count a business loss against our borrower from their 1120 (C-Corp) schedule? Answer: The answer is yes and no. If the borrower has a full-time job outside of self-employment, then both Fannie and Freddie allow you to disregard a business loss (or income) if they qualify using only non-self-employed income […]

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Fannie Mae – Business Losses – Secondary Employment: My borrower is qualifying on his IRA income but has a secondary business with large losses. Do I need to count those losses against him?

Answer: No, please see the highlighted text from the guidelines below. Reference: B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (12/04/2018) Overview When determining the appropriate qualifying income for a self-employed borrower, it is important to note that business income (specifically from a partnership or S corporation) reported on an individual IRS Form 1040 […]

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