The short answer: If you're self-employed and plan to buy or refinance in 2027, a year-end truck or equipment purchase usually hurts your mortgage less through the tax write-off than through the cash and the payment. On a Fannie Mae loan, the lender adds depreciation, including a big first-year write-off, back to your income. What it doesn't add back is the cash that left your accounts, a new loan payment in your name, or supplies and expenses you prepay in December. Make the purchase decision with your tax preparer and your mortgage broker in the same conversation.
As of November 14, 2026. Tax figures come from the IRS and lending rules from the Fannie Mae Selling Guide pages cited below. Your tax preparer and lender apply them to your own situation.
Why does this come up every November?
Because December is when a lot of contractors, truckers and small-business owners decide whether to buy that truck, trailer or piece of equipment "for the write-off." The rules for 2026 are generous. For tax years beginning in 2026, the IRS says you can elect to expense up to $2,560,000 of qualifying property under Section 179, with that limit reduced once the property you place in service passes $4,090,000. The Section 179 amount for a sport utility vehicle is capped at $32,000 (IRS Rev. Proc. 2025-32). Separately, the IRS says bonus depreciation is 100% for qualified property acquired and placed in service after January 19, 2025 (IRS, Working Families Tax Cuts business provisions).
The timing matters. Under Section 179 you deduct the cost "in the year you place the property in service," which the IRS defines as when it's "ready and available for a specific use" (IRS Publication 946). Equipment that arrives in January lands on your 2027 return, not your 2026 one.
None of that is a reason to buy or not buy. That's a tax and business decision. My job is to tell you what it looks like to a mortgage underwriter.
Does a big depreciation write-off lower the income a lender can use?
Usually not, on a conventional loan sold to Fannie Mae. If you file a Schedule C, Fannie Mae's guide lists depreciation, depletion, business use of a home, amortization and casualty losses as items to add back in the cash-flow analysis (Fannie Mae Selling Guide B3-3.6-03). The worksheet lenders use, Form 1084, adds back depreciation line by line. If you take the standard mileage rate on a vehicle, it adds back a depreciation amount based on your business miles (Fannie Mae Form 1084).
So the tax deduction from expensing a truck mostly gets reversed for qualifying purposes. Two caveats. First, the underwriter also has to look at year-to-year trends in your gross income, expenses and taxable income (Fannie Mae Selling Guide B3-3.2-01), so a sudden drop in taxable income can raise questions even when the math works. A short explanation letter helps. Second, other loan types and non-QM programs use their own methods. A bank-statement loan looks at deposits, not your return.
What does hurt?
Year-end moves and how a Fannie Mae underwriter sees them
| Lowers qualifying income? | Other mortgage effect | |
|---|---|---|
| Depreciation or Section 179 on equipment or a truck | No Added back on Schedule C | May draw a trend question if taxable income drops sharply |
| Paying cash from the business account | No | Less money available for down payment and reserves |
| Financing it with a loan in your name | No | Payment counts in your debt-to-income ratio unless the business has paid it for about a year |
| Prepaying supplies, fuel or other expenses | Yes Ordinary expenses aren't added back | No |
| Bonuses or extra wages to your crew | Yes Ordinary expenses aren't added back | No |
The cash. Fannie Mae allows business assets for the down payment, closing costs and reserves, but before using them the lender "must perform a business cash flow analysis to confirm that the withdrawal of funds" for the home "will not have a negative impact on the business" (B3-3.2-01). If December's purchase empties the business account, that gets harder to show.
The payment. If the equipment or truck loan is in your personal name, it's your debt. Fannie Mae lets a lender leave a business-paid debt out of your ratio only when the account has no history of delinquency, the business shows the obligation was paid out of company funds (such as a year of canceled company checks), and the lender's cash-flow analysis already accounted for the payment (Fannie Mae Selling Guide B3-6-05). A loan you open in December won't have that year of history by spring.
Ordinary expenses. Stocking up on supplies, prepaying next year's costs or paying year-end bonuses all reduce taxable income, and they aren't on the add-back list. I walked through which deductions lenders add back in my earlier piece on self-employed tax returns.
Which tax return will my lender actually use?
It depends on when your loan closes. Fannie Mae defines the "most recent" return as the last one scheduled to have been filed with the IRS, and ties the requirement to the loan's dates (Fannie Mae Selling Guide B1-1-03). For someone buying in 2027:
Which return a Fannie Mae lender relies on in 2027
| Return the lender relies on | Can an extension stand in? | |
|---|---|---|
| Closing January 1 to April 14, 2027 | 2025 return (the last one due) | No 2026 return isn't due yet |
| Closing April 15 to October 14, 2027 | 2026 return recommended; 2025 acceptable with extra documentation | Yes With proof of the filed extension and IRS transcript checks |
| Closing October 15, 2027 or later | 2026 return required | No |
A purchase you make before December 31 shows up on your 2026 return. If you're buying in the first few months of 2027, the lender is still mostly looking at 2025, but your bank statements will show the cash that left and your credit report will show any new loan. If you're buying later in 2027, the 2026 return becomes the main event.
A year-end checklist for self-employed buyers
Before you buy equipment or a truck this December
- 1
Now
Ask the two questions together
- Tax preparer: what does the write-off save me?
- Mortgage broker: what does the cash and payment do to my 2027 approval?
- 2
Before you sign
Decide how to pay
- Cash: check what's left for down payment and reserves
- Financing: whose name is the loan in, and what's the monthly payment?
- 3
December
Go easy on prepaying
- Prepaid supplies and expenses aren't added back
- Only spend what the business actually needs
- 4
January
Keep the paper trail
- Invoices and placed-in-service dates
- Proof the business makes any equipment payments from its own account
- 5
Before you apply
Write a short explanation
- If 2026 taxable income dropped because of one purchase, say so
- Underwriters review trends, so context helps
If you're also counting on bonus or commission income from a W-2 job in the household, the rules are different. I covered those in how lenders count bonus, commission and overtime.
Derek\'s take
I see this every year. Someone buys a truck in December because the accountant said it would save on taxes. Then in March, when they want to make an offer, the write-off isn't the problem. The problem is that the business account is lighter, there's a new payment on the credit report, and nobody looked at both at once. Sometimes the purchase is still the right call. It's just better to know the trade-off before you sign. If you're self-employed and thinking about buying or refinancing in 2027, bring me the numbers you're weighing and we'll look at both sides together. Book a call with me whenever it suits you. Thirty minutes, no credit pull, no obligation.
Frequently asked questions
Does Section 179 or bonus depreciation reduce my mortgage qualifying income?
On a Fannie Mae conventional loan, generally no. Depreciation is on the list of items added back to Schedule C income in the lender's cash-flow analysis. Other loan programs may treat it differently, and a big drop in taxable income can still prompt questions about your business trend.
Will a new truck loan hurt my mortgage application?
It can. If the loan is in your name, the payment usually counts in your debt-to-income ratio. Fannie Mae lets a lender exclude it only when the business has documented paying it, typically with a year of company checks, there's no late history, and the payment is already reflected in the business cash-flow analysis.
Can I use money in my business account for a down payment?
Often yes. Fannie Mae accepts business assets for the down payment, closing costs and reserves, but the lender must confirm through a cash-flow analysis that taking the money out won't hurt the business.
If I buy equipment in December, which return will my lender see?
The purchase lands on your 2026 return if it's placed in service by December 31. A Fannie Mae loan closing before April 15, 2027 generally relies on your 2025 return, while loans closing later in 2027 increasingly rely on 2026.
Should I skip the purchase if I'm buying a home next year?
Not necessarily. It's a business and tax decision first. The point is to weigh the cash, any new payment and your timing alongside the tax savings before you commit.
This article is general education, not tax, legal or financial advice, and not an offer of credit or a commitment to lend. Talk to your tax professional about deductions. Loan approval depends on your full application and the lender's guidelines.
Sources
- IRS Revenue Procedure 2025-32 (2026 inflation adjustments, Section 179 limits)
- IRS, Understanding the Working Families Tax Cuts: Business Tax Provisions
- IRS Publication 946, How To Depreciate Property
- Fannie Mae Selling Guide B3-3.6-03, Income or Loss Reported on IRS Form 1040, Schedule C
- Fannie Mae Form 1084, Cash Flow Analysis
- Fannie Mae Selling Guide B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower
- Fannie Mae Selling Guide B3-6-05, Monthly Debt Obligations
- Fannie Mae Selling Guide B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns
This article is general education, not a commitment to lend, an offer of credit, or tax, legal or investment advice. All loans are subject to credit approval, income and asset verification, and property appraisal. Programs, rates, terms and limits change without notice; figures are current as of the publish date. Derek Shao, NMLS #242117, CA DRE #01358261. Financial Dynamics, Inc. DBA Emory Financial, Company NMLS #393986. Equal Housing Opportunity.
