I am in the mortgage business and have been in it 4 years. I have a borrower that is short on their income on their application. Of course this is common for many business owners because they take so many deductions to reduce their tax liabilty...

They do have equipment and I know depreciation can be counted in as income... but what is the calculation for that? I have a profit and loss for the past 11 months but id doesn't seem to add depreciation back in...

If not, then what lender will do a 95% CLTV, 2nd home, 30 year fixed with an interest only option on a non-warrantable condo...

Any assistance would be appreciated.

CCrowe

CCrowe:

There are a number of ways to depreciate equipment. The easiest is straight-line, but that may not be the most advantageous. The method of depreciation can be found on Form 4562 of their tax return.

How the depreciation is calculated by the lender will depend on how they are filing. Are they a Sole Proprietor, Partnership or S Corporation, or a C Corporation? How each lender will underwrite their income will vary depending on HOW they file.

You can go to scotsmansguide.com to enter your loan requirements and it will populate a list of lenders that fit your needs. Hope this helps.

Good luck.