Your tax returns do not tell the whole story.
You write off what you are supposed to write off, and then a lender looks at your net income and says no. There are programs built for exactly this, and they are the ones most banks will not offer you.
Good business, bad-looking tax return.
If you run a business, your accountant’s job is to minimize your taxable income. A lender’s job is to look at that same number and decide what you can afford. Those two goals work against each other.
That is not a problem with your business. It is a problem with which program you are being measured against.
The same borrower, two answers
A business owner nets $60,000 on paper after write-offs. A conventional lender qualifies on that $60,000, and the answer is often no.
The same borrower’s business deposits tell a different story. A bank statement program looks at those deposits, applies an expense factor, and can arrive at a materially different qualifying income.
Same person. Same business. Different program, different answer.Programs built for how you actually earn.
These are often called non-QM loans. Terms and requirements vary meaningfully between lenders, which is the whole reason to shop them.
Bank statement loans
Qualifies you on deposits instead of tax returns. Typically 12 or 24 months of personal or business statements, with an expense factor applied by the lender.
Profit and loss only
Uses a P&L prepared for your business, often by your CPA, sometimes without bank statements. Useful when deposits are spread across accounts.
1099 income loans
Built for independent contractors paid on 1099s, qualifying from those forms rather than from a full tax return analysis.
ITIN loans
For borrowers who file taxes with an ITIN rather than a Social Security number. Requirements differ from standard programs.
Asset depletion
For borrowers with significant assets but modest documented income, qualifying income can sometimes be derived from those assets.
Conventional
If your returns actually do show strong net income, conventional financing is usually still the cheapest path. We check this first, not last.
What self-employed borrowers ask us most.
Can I get a mortgage if I am self employed?
Yes. Self employed borrowers have several paths. Conventional financing uses your tax returns, which works well if your returns show strong net income. If your returns understate what you actually earn because of write-offs, non-QM programs qualify you differently: bank statement loans use deposits, profit and loss only programs use a prepared P&L, and 1099 programs use your 1099 income. The right fit depends entirely on how your income appears on paper. This is one of the most common situations where using a broker helps, because lenders calculate self employed income very differently from one another.
What is a bank statement loan?
A bank statement loan qualifies you using deposits into your bank accounts instead of the net income on your tax returns. The lender reviews a set period of statements, applies an expense factor to estimate your true income, and uses that figure to qualify you. It is designed for business owners whose write-offs make their tax returns look smaller than their actual earnings. Because these are non-QM loans, terms, down payment, and pricing generally differ from conventional financing, and requirements vary meaningfully between lenders.
How many months of bank statements do lenders require?
Most bank statement programs use either 12 or 24 months of statements, and some lenders offer both options with different pricing. Lenders may use personal accounts, business accounts, or a combination, and the expense factor they apply to business deposits can change your qualifying income substantially. Because that expense factor is set by the lender rather than by a universal rule, the same borrower can qualify for different amounts at different lenders. That difference is the main reason to compare rather than apply in one place.
What is a profit and loss only loan?
A profit and loss only loan qualifies you using a P&L statement prepared for your business, typically by a CPA or licensed tax preparer, sometimes without requiring bank statements at all. It is useful for business owners whose deposits are complicated or spread across accounts in a way that makes a bank statement program awkward. Requirements around who must prepare the P&L, what period it must cover, and what supporting documentation is needed vary by lender.
Do I need two years of self-employment history to qualify?
Two years is the common standard, but it is not always an absolute requirement. Some programs consider a shorter history when there is a documented track record in the same line of work, for example someone who worked in an industry as an employee and then started their own business doing the same thing. Non-QM programs tend to have more flexibility here than conventional financing. If you are close to but under two years, it is worth having someone look at the specifics before assuming you need to wait.
Been told no before?
A lot of self-employed buyers assume the first no was the final answer. Often it just meant that lender’s program did not fit. Let us look at it properly.