Net profit only
- Gross receipts
- $1,100,000
- Business expenses
- −$900,000
- Net profit
- $200,000 a year
$16,667/mo
Qualifying monthly income
For business owners and the self-employed
Mortgage Options for Self-Employed Borrowers
Six ways to prove your income, checked in the order that costs you the least.
- Up to $5M
- Loan amount
- 6 ways
- To prove your income
- 640+
- Credit score
- 2 years
- Typical history
Why self-employed buyers get turned down
Being self-employed isn’t the problem. The paperwork is.
To a lender, you are self-employed when you own 25% or more of a business (Fannie Mae), or when your clients pay you on 1099s instead of a paycheck. Most lenders have one way to measure your income, and that is the bottom line of your tax return. A good CPA works hard to make that number small, so the business that pays for your life looks too weak to pay for a house.
That is why so many successful owners call me after their own bank turns them down. Nothing is wrong with them or their business. They were simply sent to a lender that only had one loan to offer, and their file didn’t fit it.
There is almost always another way. When your returns can’t do the job, the answer is usually a non-QM (non-traditional) loan. QM stands for “qualified mortgage”, the federal standard most home loans are written to. A non-QM loan still has to show you can afford the payment. It just uses bank statements, 1099s, a profit and loss statement or your savings in place of tax returns. That flexibility has a price, and you should expect a rate about 1% to 2% higher than a traditional loan.
As a mortgage broker, I can access all six paths on this page, and I check them in order, starting with the one that costs you the least. You only move to the next one when the cheaper one can’t get you the home you want.
Your options
Six ways to qualify, in the order I check them
Most self-employed buyers fit one of these. The first is the least expensive, so it is always where I start, even when you expect to need one of the others.
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Tax return loan
- How you prove income
- One or two years of personal and business tax returns. One year can be enough once your business is five years old and you’ve owned 25% or more of it that whole time.
- Best for
- Owners whose returns show solid income, especially after I add back write-offs like depreciation that never left the account as cash.
- Typical terms
- Conventional loans up to $832,750 in most areas. Jumbo loans up to $5M, from 660 credit and 10% down.
-
Bank statement loan
- How you prove income
- 12 months of personal or business bank statements.
- Best for
- Owners whose write-offs shrink their tax returns far below what the business really earns.
- Typical terms
- Up to $4M. Credit from 640 with 20% down, 15% down at 660, and as little as 10% down at 700+.
-
1099 income loan
- How you prove income
- Your 1099 forms, counted at the full amount instead of what’s left after write-offs.
- Best for
- Consultants, contractors, agents and sales reps paid by a few clients on 1099s.
- Typical terms
- Up to $3M. Credit from 640, and up to 90% financing with a 720+ score.
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Profit and loss loan
- How you prove income
- A profit and loss statement for the last 12 or 24 months, prepared by your CPA or tax preparer.
- Best for
- Owners with clean books whose deposits are hard to read, such as businesses that move money between several accounts.
- Typical terms
- Up to $4M. Credit from 640. Usually 20% down, or as little as 15% with top credit.
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Asset qualifier loan
- How you prove income
- Your savings and investments. The lender spreads them over a set number of months to create a monthly income.
- Best for
- Owners who sold a business, early retirees and anyone with large savings but uneven income.
- Typical terms
- Up to $4M. Credit from 680 to 700+, with 20% to 25% down.
-
DSCR rental loan
- How you prove income
- The property’s rent. DSCR stands for debt service coverage ratio, which compares the rent to the payment. No tax returns or pay stubs.
- Best for
- Investors buying or refinancing rental homes, including owners whose returns are full of property write-offs.
- Typical terms
- Investment properties only. Many programs let you close in an LLC.
Get my options
Not sure which of the six fits you? Tell me your situation.
Three quick taps and an optional note. I read every one myself and tell you which path fits, usually the same day.
What are you looking to do?
How do you earn most of your income?
When would you like to buy or close?
Optional. A sentence or two about your situation helps me come to our call prepared.
Where should I reach you?
Your answers are already filled in below, so I’ll know your situation before we talk.
Rather just talk?
Step one: your tax returns
Read the right way, your tax return may be enough
Before I look at any other loan, I read your returns the way the agency guidelines allow. Some write-offs, like depreciation on equipment, never actually left your bank account, so a lender can add them back to your income. Take a landscaping company owner shopping for a $1.2 million home. His return shows $200,000 of net profit, after he wrote off $64,000 of depreciation on his trucks and mowers.
After add-backs
- Net profit
- $200,000
- Depreciation added back
- +$64,000
- Income a lender can count
- $264,000 a year
$22,000/mo
Qualifying monthly income
Same tax return, and $5,333 more a month a lender can count, before we even talk about a non-QM (non-traditional) loan.
Shown for one year. When two years of returns are used, lenders average the two years. Add-backs follow Fannie Mae’s guidelines.
The big decision
Traditional loan or non-QM (non-traditional)?
Every option on this page falls into one of two groups. The difference is how you prove your income, and that choice drives your cost more than anything else.
Traditional loan, tax returns
- Income proof
- One or two years of tax returns
- Loan size
- Up to $832,750 conventional in most areas, or jumbo up to $5M
- Down payment
- As little as 5% on a conventional loan for your home, or 10% on a jumbo
- Cost
- The lowest pricing available to a self-employed buyer
Choose this if your returns, with add-backs, show enough income for the home you want.
Non-QM (non-traditional) loan
- Income proof
- Bank statements, 1099s, a profit and loss statement or your savings
- Loan size
- Up to $4M (1099 loans up to $3M)
- Down payment
- 10% to 20%, depending on the loan and your credit
- Cost
- Rates typically 1% to 2% higher than a traditional loan
Choose this if your write-offs leave too little income on your returns, even after add-backs.
Bottom line
I don’t move you to a non-QM (non-traditional) loan until I’ve shown your returns can’t get you there. When that happens, paying a little more in rate is usually still the right call. You keep the tax savings your write-offs earn you, and you can often switch to a traditional loan once your returns catch up.
Real math
Three self-employed buyers, three different loans
An agency owner whose income just jumped, a franchise owner whose write-offs bury his income, and a sales rep paid on 1099s. Each one needed a different path to the same goal.
Scenario 1 · A big jump in income
Marketing agency owner buying a $900,000 home
She has owned 100% of her agency for seven years, and her income nearly doubled last year after she signed two large clients. She is putting 20% down, which keeps her loan under the $832,750 conventional limit.
Income inputs
- Years in business
- 7
- Net income, older return
- $140,000
- Net income, newest return
- $260,000
- Two-year average
- $200,000 a year
Qualifying result
$21,667/mo
Qualifying monthly income on one year of returns
Averaging both years would give her $16,667 a month. Her agency is more than five years old, and she has owned all of it the whole time. That lets a lender use her newest return by itself, so her stronger year counts in full.
Watch for: The lender’s automated underwriting system, the software that gives every loan its first review, decides whether one year is enough. I run her file through it before we count on the higher number.
Scenario 2 · Write-offs bury the income
Owner of three fitness franchise locations buying a $1.6M home
All three locations run through one company. Payroll, equipment and franchise fees leave very little profit on his tax return.
Income inputs
- Net income on tax returns
- $95,000 a year
- Business deposits (12 months)
- $1,200,000
- Expense factor (payroll-heavy business)
- 60%
- Bank statement income
- $480,000 a year
Qualifying result
$40,000/mo
Qualifying monthly income with a bank statement loan
On his tax returns he would qualify on about $7,900 a month, nowhere close for a $1.6 million home. A lender sets aside part of his deposits for business costs, called the expense factor, and uses 60% here because of his payroll. Even so, his deposits tell the real story.
Watch for: Most programs count only one business account. If each location were its own company, that would matter, so I check how his companies are set up before choosing which statements to use.
Scenario 3 · Paid on 1099s
Medical device sales rep buying a $1.15M home
She is an independent rep paid on 1099s by two manufacturers, and she writes off her car, travel and home office.
Income inputs
- Gross 1099 income (two-year average)
- $420,000 a year
- Expenses on her tax returns
- $210,000 a year
- Net income on her tax returns
- $210,000 a year
- Expense factor on a 1099 loan
- None
Qualifying result
$35,000/mo
Qualifying monthly income with a 1099 loan
On her tax returns she would qualify on $17,500 a month. A 1099 loan counts her gross 1099 income with no expense factor, so she qualifies on twice as much.
Watch for: When one or two companies pay most of your income, the lender wants to see the work will continue, so a current contract or a recent commission statement helps.
Find your fit
Not sure which path is yours?
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Answer a few quick questions about how you earn, what you’re buying and your credit. You’ll see the loan that fits you best, why it fits, and the documents to gather. It takes about a minute, and nothing checks your credit.
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Who this is for
The self-employed borrowers I help most
Most of my clients have run their businesses for years and earn well. What they share is income that doesn’t fit the one box a typical lender checks.
Established business owners
Your company grosses seven figures, and your CPA earns the fee by keeping your taxable income low. The business is healthy. The paperwork just undersells it.
Builders and trade contractors
Roofers, electricians, plumbers and general contractors buy trucks and equipment every year. Depreciation on those purchases can often be added back, which is why I start with your returns.
Restaurant, retail and franchise owners
Rent, payroll and inventory eat most of the revenue on paper. When the returns come up short, your deposits usually make the case.
Doctors, dentists and attorneys
You might own your practice, be a partner who receives a K-1 (the tax form a partnership sends each owner) or work as a 1099 contractor. Each one pays you differently, and each points to a different loan.
Real estate agents
Commissions arrive in uneven chunks, and your marketing and car costs shrink the bottom line. A bank statement or 1099 loan can count the full picture of a strong year.
Consultants and independent contractors
IT consultants, fractional executives, sales reps and travel nurses paid on 1099s can often qualify on gross 1099 income instead of what’s left after write-offs.
Real estate investors
Your income comes mostly from rentals, and property write-offs make it look small. A DSCR loan qualifies each new property on its rent instead.
Online business owners
You earn from YouTube, TikTok, brand deals, affiliate links or an online store. Once you have two years in the same line of work, several of these paths can count income from more than one platform.
Newer businesses
You went out on your own less than two years ago, after years doing the same work for someone else. Lenders can often count that earlier experience, especially when the rest of your file is strong.
How I work your file
The order I check, and why it saves you money
Most lenders look at one path and stop. I go through them in order, from least expensive to most, and I only move on when the cheaper path can’t get you the loan you need. That order matters, because moving from the first step to the third can mean a higher rate for as long as you keep the loan.
The second step is the one most lenders skip. The agency guidelines let a lender use just your newest tax return once your business is five years old, as long as you’ve owned at least 25% of it the whole time. For an owner whose income just grew, that rule alone can keep you on a traditional loan.
How I check a self-employed file
- Two years of returns Step 1 With write-offs like depreciation added back
- One year of returns Step 2 When the business is five years old or more
- Bank statements or 1099s Step 3 When write-offs shrink the returns too far
- P&L or savings Step 4 For clean books or large savings
Add-backs come first
Depreciation, depletion, business use of your home and a few other write-offs can be added back to your income, because they never left your account as cash.
More than one business
Each business is looked at on its own. One can be five years old and qualify on one year of returns while a newer one still needs two.
A spouse on a salary
If your spouse earns a salary, their pay stubs and W-2s can be added to any of these paths.
Requirements
What self-employed borrowers typically need
These are typical across the programs I can access. Each loan page has the details for that loan.
- Self-employed
- 25%+
- Owning 25% or more of a business makes you self-employed to a lender
- History
- 2 years
- Less is often workable with strong prior work in the same field
- Credit score
- 640+
- 640 with 20% down on non-QM (non-traditional) loans; jumbo starts at 660
- Down payment
- From 10%
- With a 700+ score (720+ on 1099 loans); conventional loans can go lower
- Loan size
- Up to $5M
- Jumbo up to $5M, bank statement, P&L and asset up to $4M, 1099 up to $3M
- Reserves
- About 6 months
- Typical on non-QM (non-traditional) loans; varies by program
How large each path can go
- Up to $3M 1099 loan
- Up to $4M Bank statement, P&L or asset
- Up to $5M Jumbo
You can use these loans to buy a home, lower your rate or take cash out. Most of them work on primary homes, second homes and investment properties, while DSCR loans are for rentals only. Reserves means the savings you still have after closing, and retirement or business accounts can often count.
Checklist
What to send me first
You’ll need
- Your last two years of personal tax returns, all pages and schedules, even if you expect a non-QM (non-traditional) loan
- Business tax returns and K-1s for the same years, if you own 25% or more of the business
- Proof that you own the business and how long it has been open, such as a business license or your company papers
- The last two months of statements, all pages, for every account your down payment and savings come from
- A list of every property you own, with the mortgage, taxes and insurance for each
- A copy of your driver’s license or passport, plus your signed purchase contract when you have one
Nice to have
- 12 months of bank statements, if your returns are likely to come up short
- Your 1099 forms for the last one or two years, if clients pay you on 1099s
- A year-to-date profit and loss statement, if your business changed a lot this year
- Leases for any rentals you own or are buying
Recently funded
Turned down by her family’s bank, approved on a traditional loan
- Miami, FL
- Location
- Condo, around $600,000
- Home
- Conventional loan
- Loan
- Clear to close in 16 days
- Result
She was a social media influencer and musician in her late 20s, earning from YouTube, TikTok, Instagram and Facebook, and she called me frustrated. Her dad had sent her to his bank. After a week of sending documents and chasing calls that never came back, the bank told her the tax returns wouldn’t work. She was already under contract, with $10,000 of earnest money and a two-week deadline to get her financing approved.
The easy move would have been a bank statement loan. Instead, I went back to her tax returns and peeled her file back one layer at a time. Her business had been open five years, by one month. That let me qualify her on one year of tax returns, which Fannie Mae and Freddie Mac both allow, and build a clean conventional file.
She was approved inside her two-week deadline with no extension, and we were clear to close in 16 days. Staying on a traditional loan instead of a bank statement loan saved her $476 a month. Read the full story.
A real loan I closed in 2026. Details that could identify the borrower are left out.
Watch-outs
Where self-employed loans go sideways
Most of these problems start months before you apply, which means most of them can be avoided with one conversation before you file your taxes or make an offer.
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Writing off everything the year before you buy
The return you file this year is the one a lender will read next year. Talk to your CPA and me before you file, because a few thousand dollars in tax savings can cost you far more in buying power.
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An unfiled return at the wrong time of year
For loans applied for between mid-October and mid-April, a lender usually needs your newest return, and an extension doesn’t count as filed (Fannie Mae). If you plan to buy in the spring, ask your CPA to file early.
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Starting with the most expensive loan
A bank statement loan is quicker for a lender to set up, so some send every business owner straight there. If your returns would have worked, that choice raises your rate for no reason. Ask any lender which of your options they checked first.
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Changing your business setup right before you buy
Moving from a sole proprietorship to an LLC or an S corporation doesn’t erase your history when it’s the same business, but it adds new tax forms and paperwork. Tell me before you make the switch.
-
Pulling the down payment out of the business
You can often use business money for your down payment, but the lender has to see that taking it out won’t hurt the business. Move it early, or plan the paperwork with me first.
FAQ
Questions self-employed buyers ask me
Lenders treat you as self-employed when you own 25% or more of a business (Fannie Mae). That includes sole proprietors, partners who receive a K-1 and owners of an LLC or S corporation, even if you pay yourself a salary through your own company. If clients pay you on 1099s, you are treated as self-employed too. Owning less than 25% usually means your income is read like a regular paycheck.
Often, yes. Fannie Mae and Freddie Mac both allow one year of personal and business tax returns in some cases. Your business has to have been open at least five years, and you need to have owned 25% or more of it for all five. The lender’s automated underwriting system makes the final call, so I run your file through it before we rely on it. This helps most when your newest year is your strongest one.
A traditional loan qualified on your tax returns, either conventional or jumbo, usually costs the least. Non-QM (non-traditional) loans, like bank statement and 1099 loans, prove your income another way. Their rates typically run 1% to 2% higher because the lender takes on more risk. That is why I always read your returns first and add back the write-offs the guidelines allow before we look at anything else.
Two years is where almost every lender starts. Shorter can still work when you did the same kind of work for someone else before going out on your own. A strong file helps a lot here, meaning good credit, a healthy down payment and money left in the bank. The one-year tax return option is a separate rule, and it needs a business that has been open five years. DSCR loans for rentals skip your work history entirely.
Sometimes the underwriter, the person who signs off on your loan, asks for one to confirm your business is still open or how long you have owned it. Many CPAs won’t sign those letters, and that is fine. I can usually clear the same question with your business license, your company papers, your website or social channels, and your bank deposits. Tell me early if your CPA is hard to reach, and I will plan around it.
Yes. Your spouse’s salary, proven with recent pay stubs and W-2s, can be added to your self-employed income on any of these paths. If we use a bank statement loan with a personal account you share, both of you need to be on the loan.
Yes, and many of my clients plan on it. Once a few years of tax returns show more income, you may qualify for a traditional loan with a lower rate. I keep an eye on that for you, and I will tell you when your returns are strong enough to make the switch worth it.
Google reviews
In their words
“My CPA took advantage of some significant tax write-offs that lowered my tax liability last year. … Dale and his team have an amazing process set up to make things very efficient. … They actually communicated with me each and every day and I do appreciate that. … I won’t forget the help you’ve given me during this hard and complex time.”
Keep reading
Related articles and programs
- Business Owners How to Get a Mortgage in Nashville, Tennessee When You're Self-Employed
- Business Owners How Do Social Media Influencers Get a Mortgage? Here's How I Did It
- Business Owners How to Get a Mortgage in Austin, Texas When You're Self-Employed
- Bank Statement Loans Self-Employed? Here's How to Actually Get a Mortgage in 2026
- Business Owner Mortgage Why Tax Write-Offs Shrink Your Mortgage, and How to Still Qualify
Sources
- Fannie Mae Selling Guide B3-3.5-01, self-employed borrowers (25% ownership, one year of returns)
- Fannie Mae Selling Guide B3-3.3-03, Schedule C income and add-backs
- Fannie Mae Selling Guide B1-1-03, age of tax returns and extensions
- Freddie Mac, Income Calculator FAQ (one year of tax returns)
- CFPB, What is a qualified mortgage?
- FHFA, 2026 conforming loan limits
Program terms are typical ranges across the programs I can access and can change. Not a commitment to lend. Dale Corley, mortgage broker, NMLS #1547543.
Start with the loan that costs you the least
Start an application and send me your last two years of tax returns. I will read them first, add back what the guidelines allow, and tell you plainly which path gets you the home you want at the lowest cost.
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