What gets read first
Chester County has a lot of people who do not get a pay stub. The growing region around Kennett Square and New Garden turns out more than 500 million pounds of mushrooms a year, about half the national crop, and somebody owns each of those operations. The Great Valley Corporate Center in East Whiteland has produced a steady supply of consultants who used to work inside it.
For all of them the file works the same way. You hand over two years of federal returns, personal and business, and they get read for net profit first, then for how the two years compare. Rising is easy. Flat is fine. Falling gets questions, and the answer needs a document behind it.
Deductions that lower taxable income also lower qualifying income. An accountant optimizing for April and an underwriter reading in September are solving different problems with the same numbers, so get both into the same conversation the year before you buy.
Add-backs, and the two years side by side
Not everything a return subtracts actually left the bank account, and those items typically get added back before qualifying income is set. Depreciation and amortization are the usual ones, depletion where it appears, and a documented one-time loss may be treated as non-recurring.
Keep the business and the household in separate accounts; commingled deposits turn a two-week review into a six-week one.
What comes out is a monthly figure, and every ratio runs off it. FHA’s manual limits are 31% for housing and 43% for total debt, wider with compensating factors and wider still on a strong automated approval. Conventional starts at a 620 score, with pricing improving up to 780.
The rest of what you hand over
Expect to be asked for a signed authorization to pull IRS transcripts, a year-to-date profit and loss statement, business bank statements, and evidence the business is still trading, which is usually a license, a registration or a letter from your accountant. Partnerships and S corporations bring K-1s, and the question is whether distributions reached your personal account.
On a seasonal operation the year-to-date figure carries extra weight: a grower who applies in February is showing a very different half-year than one who applies in August.
Bank-statement programs, and who sets the terms
When two years of returns do not tell the true story, you may be offered a bank-statement program, where qualifying income is calculated from deposits. Every version is built in-house, with no agency rulebook underneath it, so terms move desk to desk.
The common shape, as typically offered: 12 or 24 months of deposits reviewed, an expense factor of around 50% applied to a business account, two years of self-employment, from 10% down, and a score in the high 600s or better (typical practice, per thelender.com, July 2026). Every one is set in-house, which is exactly why you want the terms in writing before you rely on them.
When the business is on the property
This is where Chester County gets specific. USDA’s site rules exclude land or buildings used principally for producing income, and a property used primarily for agriculture, farming or a commercial enterprise is ineligible; vacant land with no eligible residential improvements is out on its own account. A place with acreage, a barn or a silo no longer in commercial use can still qualify (7 CFR 3555.201, current August 2026). So on a farmette south of Route 1 the question is what the acres are doing.
One more, for the builders and remodelers reading this. FHA lets you build your own house on a construction-to-permanent loan only if you hold a general contractor’s license. And on a HomeStyle renovation, work you do yourself is capped at 10% of the as-completed value, with materials and documented contract labor reimbursable; your own labor is not. Trade skills are worth real money on those files, and the rules cap how much of it counts.