Self-employed home loans
When your tax returns understate what you really earn, you can still qualify. How bank statement loans work and how to prepare.
Self-employed borrowers often earn plenty but show little on paper, because good tax planning lowers taxable income. Conventional and FHA loans use the income on your tax returns. If that number is too low, there are other ways to qualify.
Your options
- Conventional or FHA with tax returns. The best pricing, if your returns show enough income after write-offs.
- Bank statement loans. Qualify on the deposits into your business or personal bank accounts over a set number of months.
- 1099 and profit and loss programs. For contractors and business owners with simpler records.
How to get ready
- Keep business and personal accounts separate. Mixed accounts are harder to document.
- Have your most recent tax returns, business license or CPA letter, and bank statements ready.
- Talk to your broker before you file your next return, so you know how write-offs will affect your loan.
- Avoid large unexplained transfers between accounts while you are applying.
Pitfalls to watch for
Questions people ask
Can I get a mortgage if my tax returns show low income?
Yes. A bank statement loan qualifies you on the deposits into your business or personal accounts instead of the income on your tax returns.
How long do I need to be self-employed?
Most programs want a history of self-employment, often around two years. Some allow less if you worked in the same field before. Your broker can tell you what your history supports.
Are bank statement loans more expensive?
Usually somewhat, because they are non-QM loans that do not follow agency guidelines. For many business owners the difference is worth it compared with not qualifying at all.
Can I use a 1099 or profit and loss statement?
Some non-QM programs qualify borrowers with 1099s or a profit and loss statement. Ask which documents you have and the right program follows from that.
Talk it through with a licensed broker
Call 949-463-9898 or send your scenario. You get a straight answer the same day, including when this loan is not the right fit.