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BUSINESS

How to Prepare

for Homebuying

If You Run a Practice

By Jon Tober

Running your own medical practice comes with a unique set of Tax Returns
perks, but if you’re ready to purchase a home, it also requires some You’ll most likely need to submit at least
unique steps in the homebuying process. Typically, self-employed two years' worth of federal tax returns, as
individuals tend to have fluctuating income and debts that could be opposed to one year for employed appli-
tied to their business, so lenders will require additional pieces of cants.
documentation—even if those aren’t necessarily concerns for you
and your practice. don't let this deter you from pursuing the home- Profit and Loss Statement
buying journey! This article will list the types of documentation you A profit and loss statement, commonly referred to as your
may need, as well as any obstacles that could get in your path so P&l, provides a comprehensive snapshot of the revenues, costs,
that you can properly prepare. and expenses that your practice incurred over a period of time.
While the actual homebuying process is the same for both self- Since business owners may typically not receive traditional pay-
employed and employed homebuyers including the application, checks to validate income, the P&l provides lenders with the in-
rate qualification, credit and income requirements, underwriting, formation they need to understand if a business is profitable.
etc., the documentation aspect of the process is relatively differ- This impacts how the lender views the financial standing of you
ent. Whereas someone who is employed for a corporation can ac- and your practice.
cess their W-2 forms and get proof of employment, self-employed
homebuyers will have to provide a few more pieces of informa- Statements
tion to their lender in order to accurately assess their true financial While bank and financial statements are required from all bor-
picture. rowers, self-employed applicants are required to submit statements
from both their personal and business accounts. Again, lenders want
In general, all borrowers and co-borrowers, if to accurately assess your full financial picture, including personal
applicable, are required to submit the following: and business debts and liabilities. To help make things as clear and

• A driver's license or government-issued photo identification uncomplicated as possible, avoid mingling expenses between the
• birth date accounts.
• Social security number
• bank and liquid asset account statements Partnership Tax Returns
• Address information for the previous two years If more than 25% of your practice is owned by another individual
• If a current homeowner, loan information or entity, your lender will require copies of the previous two years'
corporate/partnership tax returns.

32 San Antonio Medicine • June 2019