Do Mortgage Lenders Use Gross or Net Income For Self Employed Home Loans?

Are you a self-employed individual dreaming of owning your own home? Congratulations on taking that exciting step towards homeownership! However, navigating the mortgage landscape can be a daunting task, especially when it comes to understanding how lenders assess your income. One common question that arises is whether mortgage lenders use gross or net income for self-employed mortgage loans.

The answer? It depends. Let’s delve into the nuances of this topic to shed some light on what self-employed individuals need to know when applying for a mortgage.

Gross Income vs. Net Income

Before we dive into the specifics of mortgage lending, let’s clarify the difference between gross and net income:

  • Gross Income: This is the total income earned before any deductions, such as taxes, insurance, or business expenses, are subtracted. It represents the total revenue generated by your business.
  • Net Income: Also referred to as “take-home pay,” net income is the amount of money you have left after deducting all expenses from your gross income. It reflects your actual earnings after accounting for business expenses, taxes, and other deductions.

How Mortgage Lenders Evaluate Self-Employed Borrowers

For self-employed individuals, providing proof of income can be more complex compared to traditional W-2 employees. Lenders typically require at least two years of tax returns to verify your income stability and assess your ability to repay the mortgage. However, the way lenders interpret your income may vary.

Gross Income Approach

Some mortgage lenders may use your gross income to calculate your borrowing capacity. This approach involves looking at your total revenue before deducting business expenses. By using gross income, lenders aim to maximize the loan amount you qualify for, as it represents the highest possible income figure.

Net Income Approach

On the other hand, other lenders may opt to use your net income when evaluating your mortgage application. This approach takes into account your actual take-home pay after deducting business expenses and taxes. While using net income may result in a lower borrowing capacity compared to gross income, it provides a more accurate picture of your financial situation and ability to repay the loan.

Which Approach Is Right for You?

Determining whether lenders use gross or net income for self-employed mortgage loans depends on various factors, including the lender’s policies, your financial situation, and the type of loan you’re applying for. However, there’s no one-size-fits-all answer.

Simplifying the Process

Navigating the complexities of self-employed mortgage loans can be overwhelming, but you don’t have to go it alone. At QuestRock, we specialize in helping self-employed individuals secure the financing they need to achieve their homeownership goals.

With our expertise in mortgage lending and dedication to customer satisfaction, we strive to make the process as seamless as possible for our clients. Whether you have questions about income verification, loan options, or the application process, our team is here to provide guidance every step of the way.

Reach Out to Us Today!

If you’re ready to explore your options for a self-employed mortgage loan, don’t hesitate to get in touch with us. We understand the unique challenges faced by self-employed borrowers and can offer personalized solutions tailored to your needs.

Getting started is easy – simply give us a call, send us a text, or shoot us an email, and one of our experienced mortgage professionals will be happy to assist you. With our expertise and commitment to excellence, you can trust us to help you find the right financing solution for your homeownership journey.


When it comes to self-employed mortgage loans, understanding whether lenders use gross or net income is crucial for determining your borrowing capacity. While some lenders may use gross income to maximize loan amounts, others may prefer to use net income for a more accurate assessment of your financial situation.

At QuestRock, we’re dedicated to simplifying the mortgage process for self-employed individuals and providing them with the guidance and support they need to achieve their homeownership dreams. If you’re ready to take the next step towards owning your own home, reach out to us today – we’re here to help!

By offering clear, concise information and highlighting the convenience of reaching out for assistance, this blog post aims to empower self-employed individuals to confidently navigate the mortgage application process.