Self-Employed Income
From sole proprietors to S-corp owners, IncomeCalculator.com untangles business returns and K-1s into a clear, qualifying monthly income.
Self-employed income is where qualifying gets complicated. Net profit lives across multiple schedules, add-backs like depreciation and depletion need to be restored, and ownership percentages determine how much of the business flows to the borrower. A small mistake compounds quickly.
IncomeCalculator.com reads the borrower's personal and business returns together, applies the standard add-back conventions, weights the years appropriately, and returns a monthly qualifying figure with the supporting math shown — so you can review every line before you rely on it.
What to upload
- Personal tax returns (Form 1040) — typically two years
- Schedule C for sole proprietors
- Business returns: 1065 (partnership) or 1120-S (S-corp)
- K-1s for each entity the borrower owns
- Year-to-date profit & loss statement, when required
How the calculation works
Identify the business structure
The assistant determines whether the borrower files as a sole proprietor, partnership, or S-corp, and locates the right schedules for each.
Restore the add-backs
Depreciation, depletion, amortization, and other non-cash or one-time items are added back per agency convention to reflect true cash flow.
Apply ownership and average
Income is scaled to the borrower's ownership percentage, averaged across the look-back period, and tested for a stable or declining trend.
Supported programs
Conventional, FHA, VA, and Non-QM. For DSCR scenarios, self-employment income is typically not required — but the assistant will flag when it matters.
Common questions
How many years of returns do I need?
Most programs expect two years of personal and business returns. The assistant will tell you when a single year or a year-to-date P&L is sufficient.
Does it handle declining income?
Yes. If the most recent year is lower, the calculation flags the decline and applies the more conservative figure rather than a simple average.
What about multiple businesses?
Upload all relevant K-1s and business returns. Each entity is evaluated and combined into the borrower's total qualifying income.