re: home loan qualifications and the self employed

You ought to bite the bullet and pay yourself a salary or pay yourself by the hour somehow. Maybe an S-Corp and name yourself an employee? I'm no tax expert but I ran into this back in June myself. I had an LLC that I expensed some things to in order to lower my tax bracket. They used my W-2'd income at first, and then when I submitted tax returns, they had to use my AGI (Adjusted Gross Income).

I ended up dissolving the business through the SOS office. The write-offs I was using it for weren't worth my inability to get approved for a home loan.

Best of luck.