According to general underwriting rules, how long must a self-employed business run profitably for income to be considered stable?

To assess the financial stability of a self-employed individual for underwriting purposes, lenders typically look for a track record of consistent profitability. A duration of two years is generally regarded as the minimum standard for establishing a stable income stream. This timeframe allows lenders to examine the self-employed individual's financial performance, such as net income and cash flow, over enough time to gauge the sustainability of the business.

The two-year requirement helps ensure that the income is not just a temporary spike, but rather reflective of a steady business operation. In the underwriting process, this historical data reduces the risk for lenders by demonstrating that the self-employed borrower can maintain their income over a reasonable period. A shorter timeframe may yield insufficient data on business cycles or variability in income, while longer periods might be unnecessary and could complicate the process without providing significantly more assurance of stability.