06 · Self-employment income
Self-employment income
Schedule C · Fannie 1084 · Increasing
Business type
Line item
Year 1
Year 2
Tax year
Net profit (Line 31)
$
$
Non-recurring other income / loss
$
$
Depletion
$
$
Depreciation
$
$
Non-deductible meals
$
$
Business use of home
$
$
Amortization / casualty loss
$
$
Mileage depreciation
$
$
Qualifying monthly income
$10K
Schedule C · Fannie 1084 · two-year average
Year 1 cash flow
$110,100
Year 2 cash flow
$127,900
2-yr average
$119,000
Trend
Increasing
Line-item reconciliation
Sign conventions: “addback” rows positively contribute to cash flow (non-cash deductions); rows marked “subtract” reduce usable income.
| Line | Year 1 | Year 2 |
|---|---|---|
| Net profit (Sch C line 31) | $96,000 | $112,500 |
| Non-recurring other income / loss | $0 | $0 |
| Depletion (addback) | $0 | $0 |
| Depreciation (addback) | $8,400 | $9,200 |
| Non-deductible meals (subtract) | -$0 | -$0 |
| Business use of home (addback) | $3,600 | $3,800 |
| Amortization / casualty loss (addback) | $0 | $0 |
| Mileage depreciation (addback) | $2,100 | $2,400 |
| Adjusted cash flow | $110,100 | $127,900 |
Program eligibility
All mainstream programs use 2-year averaging for self-employment. Declining-income borrowers must use the lower year’s figure, per Fannie B3-3.6-07.
Conventional
2-yr avg ✓
Fannie 1084 / Freddie Form 91. 2-yr avg; trend gate B3-3.6-07.
FHA
2-yr avg ✓
4000.1 II.A.5.b — requires 2 yrs of tax returns and current profit-and-loss.
VA
2-yr avg ✓
VA Handbook 26-7 Ch. 4 — 2 yrs required; CPA letter for year-to-date earnings.
USDA
2-yr avg ✓
HB-1-3555 Ch. 9 — 2 yrs trailing + current P&L.
For pre-qualification analysis only. Equal Credit Opportunity Act / Reg B prohibits using this tool to make credit decisions. Fannie 1084 treatment assumes complete, audited tax returns; an authorized underwriter verifies line items, business-structure changes, and the B3-3.6-07 trend gate.