Net income
Income after all business deductions. On a tax return, this is Schedule C net profit. It’s the number conventional lenders use for self-employed qualifying income — not gross revenue, not deposits, not what you invoice.
How does this affect your loan? Estimate self-employed qualifying income with the
DTI calculator, or read the
self-employed mortgage guide.
Related terms
- Form 1084 — Fannie Mae’s self-employed income analysis worksheet. Lenders use it to standardize how they calculate qualify…
- 2-year average — How conventional lenders handle self-employed income variability: they average qualifying income across the tw…
- Depreciation add-back — Depreciation is a non-cash expense — it reduces Schedule C net income without representing real money leaving…
- Rising income / declining income — Income trend affects how lenders apply the two-year average. Rising income (year 2 higher than year 1) is favo…
- Add-back — A non-cash or one-time business expense that can be added back to Schedule C net income when calculating quali…
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Sources
Educational definition only — not financial, legal, or tax advice. Programs and limits change; verify current terms with a licensed professional.