Income Taxes for Conventional Mortgage

[Steven Lopez]

I've seen it mentioned on some posts that lenders like to see that people pay income taxes. 

What do they look for with conventional owner-occupied mortgages? This is conflicting because we try to write off every dollar that we can!

Thanks for the help in advance

[Daniel Hennek]

Giving it straight, and blunt.

There's nothing conflicting about how lenders evaluate the self employed.  We look to see that you're making money. If everything is a "write off" then by definition nothing is income. Expenses are not income. Revenue is not income.  Revenue is money generated by a business before expenses.  Expenses are the costs to run that business that you "write off".  Profit is what's left over.  Profit is income.

A lender is looking for how much money you have to pay a mortgage payment each month so looking at your revenue would not be an intelligent way to evaluate the situation because you could have lots of expenses and some businesses actually lose money.  Lenders are looking at what's left over because they're looking for the truth of your financial situation.

You should try to accurately count all your expenses and reduce your tax burden, that's just being smart with your money.  However, if your expenses leave nothing left over then you're not making money.  It's that simple.  How are you going to pay a mortgage payment if there's nothing left over?

I hear this all the time, "well I am self employed I can move money around however I want, I know I can pay the mortgage payment easily".  However, the tax returns have proven that there is barely enough money to pay expenses.  You're not counting fake expenses that you can just remove from the equation are you?  And you shouldn't ignore legitimate expenses to show more income and pay more taxes.  What you need to do is make more money so your business actually makes a profit beyond expenses.