Mortgage Self-Employed Calculator

Self-employed qualification uses 2-year tax return average, with add-backs for non-cash deductions.

Year 1 net business income

Year 2 net business income

Year 2 depreciation add-back

Year 1 depreciation add-back

Monthly qualifying income

$11,896

Annual average

$142,750

Total add-backs

$15,500

How the math works

Income = (Y1 + add-backs + Y2 + add-backs) / 2. Monthly = annual / 12.

($120k + $7.5k + $150k + $8k) / 2 = $142,750 avg / 12 = $11,896/mo qualifying.

How to Use

Enter year 1 net business income.
Enter year 2 net business income.
Enter year 2 depreciation add-back.
Enter year 1 depreciation add-back.
Read monthly qualifying income.

Frequently Asked Questions

Self-employed income calc?

Schedule C / 1120-S / 1065: 2-year average net business income, add back depreciation, depletion, casualty loss. Excluded: business interest, real estate gains. K-1 income: distributions only if regular pattern. New business <2 years: most lenders won't qualify; some bank-statement programs accept 6–12 months. Conventional: needs 2 years stable, declining income year-over-year creates issues. Required documents: 2 years personal + business tax returns, P&L year-to-date if applying mid-year, business license, CPA letter optional.

How does this debt analysis fit a workout strategy?

Workout, default, and recapitalization decisions depend on the gap between in-place debt and current asset value. Lenders evaluate cure cost, foreclosure timeline + cost, broker price opinion (BPO), and borrower equity. Borrowers evaluate equity in the property, refinance feasibility, and forbearance economics. This calculator provides one input to that multi-factor decision.

Discounted payoff (DPO) vs forbearance vs deed in lieu?

DPO: lender accepts less than full balance to avoid foreclosure cost, common with non-recourse and underwater assets. Forbearance: payment deferral 6–18 months, balance accrues, useful when value will recover. Deed in lieu: borrower transfers title to lender, faster than foreclosure but lender takes full risk. DPO often best when borrower has new capital + lender wants quick exit.

Special servicing dynamics?

CMBS loans transfer to special servicer at default or maturity default. Special servicer compensation aligns with workout, but timeline is 6–24 months and fees stack ($25–250k+ in costs). Whole-loan and balance-sheet lenders move faster but with less flexibility. Bridge and debt fund lenders most flexible. Time-to-resolution and total friction cost should be weighted in any borrower scenario.