What does the lender look at on a Self Employed Tax return?

[txgurl]

I am thinking about buying my first home. I have two years been self-employed (contract labor not business) and have tax returns to prove income. However, I am slightly confused at what the lender will be looking at. I was told that it is the adjusted gross income, but someone also told me the taxable income. I think the latter is wrong because it includes standard deductions, not business deductions, therefore I still brought that home. Can someone help me please?