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February 25, 20266 min read

Self-Employed? Here's How to Get a Mortgage

Being self-employed doesn't disqualify you from getting a mortgage — it just requires a different approach. Here's what you need to know.

Self-employed borrowers often assume getting a mortgage will be difficult or impossible. The reality is more nuanced: traditional mortgage qualification can be challenging for self-employed borrowers, but there are excellent alternative programs designed specifically for you.

The Challenge with Traditional Qualification

Traditional mortgage qualification uses your adjusted gross income from your tax returns. The problem? Most self-employed borrowers minimize their taxable income through legitimate business deductions — which is smart tax planning, but it makes your income look lower than it actually is.

If your Schedule C shows $80,000 in gross income but $50,000 in deductions, your qualifying income is $30,000 — even if your actual cash flow is much higher.

Option 1: Traditional Qualification (Tax Returns)

If your tax returns show sufficient income after deductions, traditional qualification may work. Lenders use a 2-year average of your net self-employment income (after adding back depreciation and other non-cash deductions).

This works best for borrowers who:

  • Have been self-employed for 2+ years
  • Have growing income (lenders average the two years)
  • Don't have excessive deductions

    • Option 2: Bank Statement Loans

    Bank statement loans are designed specifically for self-employed borrowers. Instead of tax returns, we use 12 or 24 months of bank statements to calculate your qualifying income.

    How it works:

  • Personal bank statements: We use 100% of deposits as income
  • Business bank statements: We use 50% of deposits (to account for business expenses)
  • We calculate a monthly average and use that as your qualifying income

    • Requirements:

  • 2+ years self-employment history
  • Minimum 660 credit score
  • 10–20% down payment
  • Reserves required

    • Bank statement loans typically have slightly higher rates than conventional loans, but they allow you to qualify based on your actual cash flow.

    Option 3: DSCR Loans (For Investment Properties)

    If you're buying an investment property, DSCR loans require no personal income documentation at all. Qualification is based entirely on the rental income of the property. This is ideal for self-employed investors.

    Option 4: Asset Depletion

    If you have significant assets (retirement accounts, investment portfolios, savings), some lenders will calculate a monthly income based on your assets divided over a set period. This can be combined with other income sources.

    Tips for Self-Employed Borrowers

    Keep business and personal finances separate. Commingled accounts make it harder to document income and can raise red flags with underwriters.

    Maintain clean bank statements. Large, unexplained deposits or unusual transactions will require explanation.

    Consider your timing. If you're planning to buy in the next 12–24 months, be thoughtful about how aggressively you take deductions this year.

    Work with a lender who specializes in self-employed borrowers. Not all lenders offer bank statement loans, and not all loan officers understand the nuances of self-employment income.

    What We Need from You

    For a bank statement loan:

  • 12 or 24 months of bank statements (personal or business)
  • 2 years of self-employment history (business license or CPA letter)
  • Minimum 660 credit score
  • Down payment funds

    • For traditional qualification:

  • 2 years of personal tax returns (all pages)
  • 2 years of business tax returns (if applicable)
  • Year-to-date profit & loss statement
  • Business bank statements

    • We work with self-employed borrowers regularly and understand the unique challenges you face. Let's find the right program for your situation.