Schedule C
The IRS form where sole proprietors and single-member LLCs report business income and expenses. Conventional lenders use the net profit figure from Schedule C to determine qualifying income for self-employed borrowers. High deductions reduce Schedule C net income significantly — which is the primary reason self-employed borrowers turn to non-QM programs.
How does this affect your loan? Estimate self-employed qualifying income with the DTI calculator, or read the self-employed mortgage guide.
Related terms
- DTI (Debt-to-Income Ratio) — The percentage of your gross monthly income that goes toward debt payments. Front-end DTI covers housing costs…
- Qualifying income — The income figure a lender actually uses when calculating your DTI — not your gross revenue, not your total de…
- Net income — Income after all business deductions. On a tax return, this is Schedule C net profit. It’s the number conventi…
- 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…
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Educational definition only — not financial, legal, or tax advice. Programs and limits change; verify current terms with a licensed professional.