There is no single magic line; underwriters build your qualifying income from the schedules underneath the return. That surprises a lot of people. The underwriter does not read your adjusted gross income off page one and call it your income, and the finished number can land above or below that AGI. For a self-employed borrower, the underwriter works through your Schedule C or business returns with a cash flow analysis (Fannie Mae's Form 1084 is the standard worksheet). Specific non-cash deductions get added back because they reduced your taxable profit without leaving your bank account: depreciation, depletion, amortization and casualty losses, and business use of home. The add-back list is specific, though. Voluntary retirement contributions like a solo 401(k), for example, live on Schedule 1 and are never an add-back. For a W-2 employee, the underwriter often leans on your recent pay stubs, W-2s, and a written verification of employment more than last year's return. Variable pay gets averaged rather than taken at face value. Under Fannie Mae's guideline, bonus, overtime, and commission income is generally averaged over a two-year history; a 12-month history can sometimes work when other strengths of the file offset the shorter term, and a declining trend draws extra scrutiny. One big recent month does not count in full. If your income is anything other than a flat salary, get it analyzed early, before you are under contract. That is exactly the kind of thing we work through in the free Roadmap conversation, about 20 minutes where we run your real numbers.