Mortgage when one spouse is self employed?

My wife is self employed, with a home daycare, and we would like to buy a house in the spring. After we do our taxes she will have the business on two years of tax returns. I am wondering how lenders figure out her income. I have heard that they look at the profit from the business but are they going to look at the... show more My wife is self employed, with a home daycare, and we would like to buy a house in the spring. After we do our taxes she will have the business on two years of tax returns. I am wondering how lenders figure out her income. I have heard that they look at the profit from the business but are they going to look at the most current year? during the 2008 year she didn't make a profit because she was only watching one kid.
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