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Traditional 401k vs Roth 401k
Hello everyone, I am very new to this forum and excited to learn. I have a simple question to ask, and realize the answer may be to speak directly with a mortgage lender, however I am wondering if anyone knows first hand what the answer may be.
My wife and I own a small business and after the end of this year we will have 2 years worth of income. The first year our net income was $160,000 and this year we plan to make about $230,000.
Our CPA is encouraging us to contribute max to our Traditional 401k, however I am wondering because this is a pre-tax deduction will this affect our "buying power"/mortgage amount in the future? Would it be better to contribute to a Roth 401k?
Recently I was told that when applying for a loan, only our net income is considered and not our retirement contributions, is this true?
2023 Plan: Acquire a multifamily property to house hack.
Thank you!
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@Phi Tran, do as your CPA says. Whoever told you that lenders look at net income is not correct.
For house hack you'll be using a conventional conforming loan. They look at two ratios with your income. Gross monthly income versus the mortgage payment and gross monthly income versus the mortgage and other debt payments.