A client came to me after not hearing from his current loan officer. The loan officer went silent, and he needed a cash out refinance for remodeling on his home. While we were talking on the phone, he received an email saying the loan was denied. He never heard from the loan officer.

Why was he denied?

He was self-employed and his personal tax returns showed too little income. I asked the client if his previous loan officer reviewed his business returns. He said those were never requested. I got both the personal and business returns. I could see why the personal returns looked bad as very little income was shown on the Schedule E from the business returns. When I looked into the business returns, I found ways to make the loan work. The business took large depreciation and depletion deductions, which can be added back to the qualifying income. He also showed a carry forward loss, which again, can be added back. Once I added back the income, he qualified for the loan, was able to get the cash out of his home, and completed the renovation to the home.

This is why it is so important to get business and personal returns for self employed buyers.