Self-Employed Mortgage Guide

Conventional and FHA loans qualify you off adjusted gross income after write-offs. If you gross $400,000 but net $110,000 after Schedule C deductions, Fannie Mae sees $110,000. That's the correct answer for taxes and the wrong answer for a mortgage.

Non-QM programs solve this by qualifying you on the cash actually moving through your business, not the number on line 31 of your Schedule C.

The most common non-QM program. Underwriters average 12 or 24 months of business or personal bank deposits, apply an expense ratio (usually 30–50%), and use the result as your qualifying income.

• 12- or 24-month options, business or personal accounts
• Typically 10–20% down for owner-occupied
• Minimum credit scores start around 660, best pricing at 720+
• Loan amounts up to $3M+ on jumbo bank statement programs

Best fit: business owners with strong deposits and heavy legitimate write-offs. If your deposits average $50,000/month, a 50% expense ratio qualifies you on $25,000/month — even if your tax returns show far less.

For independent contractors who receive 1099s. Instead of tax returns, we use the gross 1099 amount, apply a fixed expense factor (typically 10–20%), and qualify you on that.

Ideal for real estate agents, insurance producers, consultants, and gig-economy earners with two years of 1099 history. Usually simpler documentation than a bank statement loan.

The lightest documentation program available. A CPA-prepared profit-and-loss statement covering the last 12–24 months, plus two months of business bank statements to support it. No tax returns, no full bank statement review.

Rates are higher and down payments larger (typically 20–25%), but for a well-documented business with a clean P&L, it's the fastest path to close.

For borrowers with significant liquid assets but limited documentable income. The lender divides eligible assets (typically 70–80% of retirement accounts, 100% of taxable brokerage and cash) by the loan term to create qualifying income.

A $2M portfolio can produce $6,600–$8,300 of qualifying income per month on a 20–25 year amortization. Common for early retirees, business owners between exits, and inheritance-funded buyers.

The single most common self-employed mortgage failure: aggressive tax deductions in the year or two before buying. Home office, vehicle depreciation, meals, and equipment write-offs directly reduce your qualifying income on conventional loans.

If you know you'll be buying in the next 24 months, coordinate with your CPA on which deductions to defer. On non-QM programs this matters far less, but on conventional it's often the difference between qualifying and not.