Utah Small Business Owners With Low Taxable Income May Still Qualify for a Mortgage

Steve Saxton, Self-Employed Loan Strategist with Christian Roberts Mortgage, is helping self-employed Utah homebuyers solve one of the most common mortgage problems facing business owners: strong cash flow, but not enough taxable income showing on their returns.

Saxton recently closed a jumbo bank statement loan for an out-of-state buyer purchasing in Heber City, Utah, after multiple lenders had told the borrower the file would be difficult or potentially impossible to qualify.

The borrower owned 50% of an Arizona-based business, had more than 20% available for a down payment, and was shopping for a home between $2.5 million and $3 million.

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He and his wife were also building a custom home in Tuhaye valued at approximately $12 million and wanted a home to live in during construction.

After reviewing the personal and business returns, Saxton determined that the borrower’s K-1 income and taxable income did not provide enough qualifying income for a traditional jumbo mortgage.

Depreciation, amortization, legitimate business deductions and sophisticated tax planning had reduced the income ultimately reported on the borrower’s personal tax returns.

“The borrower did not have an earnings problem,” Saxton said. “He had a documentation problem.”

After asking additional questions about the business, Saxton determined that a 12-month business bank statement mortgage could be a viable option.

Twelve months of business bank statements were collected and eligible deposits were averaged.

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