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Understanding One-Year Tax Returns for Self-Employed Borrowers In Georgia

Jan 10, 2024

Self-employed borrowers in Georgia often face unique challenges when it comes to obtaining a mortgage. One of these challenges is providing the necessary documentation to prove their income stability.

The Requirement for Each Business Entity

When it comes to self-employed borrowers with multiple business sources, each business entity must be in existence for a minimum of 5 years. This means that if a borrower has two businesses, one of which has been open for 5 years and the other for only 2 years, they may have to provide 2 years of business returns for one business and only 1 year for the other.

Waiving the 2-Year Business Tax Returns

While the general requirement is to provide 2 years of business tax returns, there are circumstances under which this requirement can be waived. To qualify for the waiver, the following conditions must be met:

  • Personal Funds: The entire down payment, closing costs, and reserves must come from personal funds.
  • Business Existence: Each business entity must have been open for at least 5 years.
  • Income Increase: The most recent 2 years of tax returns must show an increase in income.

By meeting all three of these conditions, self-employed borrowers can potentially waive the need to provide 2 years of business tax returns, simplifying the loan application process.

Obtaining a mortgage as a Georgia self-employed borrower can be challenging, but understanding the requirements and conditions can help streamline the process. By providing one-year tax returns and meeting specific criteria, self-employed borrowers can demonstrate their income stability and increase their chances of securing financing. If you have any further questions or need assistance with your mortgage application, feel free to contact us. We are dedicated to providing exceptional financing solutions to meet your unique financing needs.