If you are working as an Independent Contractor and planning to buy a home for your family, there are important things you should know when filing your taxes 2 years prior to buying a home.
1. File your tax Returns with limited tax deductions. Reducing your income too much with loaded expenses will show that you do not have enough income to pay your mortgage.
2. Do not minimize your income as loan/mortgage officers need to see substantial income for the last 2 years.
3. If you are filing using a 1099 form and not a W-2, then it is important for you to avoid overdoing your tax deductions, 2 years prior to buying your home.
4. Debt to income ratio should be below 40% of your annual income. Don’t rack up new debt.
5. Make sure you do not go out and make major purchases such as Appliances, Furniture, and Cars for yourself or your family members.
If you are a 1099 Tax filer, on Independent Contractor status, you have got to watch this video if you plan to buy a home in the near future.