Quick answer
Self-employed borrowers can qualify for a mortgage six main ways. Two years of tax returns with add-backs like depreciation gets the best rates. If your returns show too little income, 12 to 24 months of bank statements, a CPA-prepared P&L, 1099s, asset depletion or, for rentals, a DSCR loan can qualify you instead. Most programs want 2 years in business (some accept 1), a credit score around 620 to 680+, and 10% to 20% down on alternative-documentation loans.
Why it's harder when you're self-employed
A lender qualifies you on the income you can document. For a W-2 employee that's the salary. For a business owner it's usually the net income after expenses on your tax return. A good CPA keeps that number low. So a business depositing $20,000 a month can show a lender $5,000.
The options below are different ways of showing your real income.
The six ways to qualify
| Path | What counts as income | Best for | Learn more |
|---|---|---|---|
| Full documentation | 2-year average of net income from your returns, plus add-backs | Returns that already show enough income. This gets the best rates. | Add-backs explained |
| Bank statement loan | 12 to 24 months of deposits, minus an expense factor | Strong cash flow, heavy write-offs | Bank statement loan |
| P&L loan | A profit-and-loss statement prepared or signed by a CPA or tax preparer | Clean books and a CPA who'll sign | P&L loan |
| 1099 loan | Gross 1099 income, minus an expense factor | Contractors and commissioned pros | 1099 loan |
| Asset depletion | Savings and investments turned into monthly income | Large assets, low reported income | Asset depletion |
| DSCR loan | The property's rent, not your income | Investment properties only | DSCR loan |
Compare the three most common side by side: bank statement vs P&L vs 1099.
Typical requirements
| Requirement | Full documentation | Alternative documentation (non-QM) |
|---|---|---|
| Time self-employed | Usually 2 years | Usually 2 years; some accept 1 with prior work in the same field |
| Credit score | 620+, best pricing 740+ | Often 660+, some down to 600 |
| Down payment (purchase) | 3% to 5% with some programs | Usually 10% to 20% |
| Debt-to-income | Up to about 45% to 50% | Up to about 50% |
| Reserves | Varies | Often 3 to 12 months of payments |
| Rate | Standard market rates | Usually higher than conventional |
These are typical ranges, not promises. Each program sets its own rules.
How to pick the right path
- Start with your returns. Have a loan officer calculate your qualifying income with add-backs first. If it's enough, full documentation is almost always cheapest.
- If not, look at your deposits. Steady business deposits point to a bank statement loan. Clean books with a CPA point to a P&L loan.
- Paid on 1099s? A 1099 loan is usually the simplest.
- Lots of savings but little income? Asset depletion.
- Buying a rental? A DSCR loan skips your income completely.
Less than two years self-employed
Some programs accept one year of self-employment when you worked in the same line of work before going out on your own. A contractor who was a W-2 project manager for a builder is a common example. Expect a bit more documentation and sometimes a higher rate. Same idea for home equity: one year self-employed.
Before you apply
- Pull 24 months of business and personal bank statements, and know what any large deposits were.
- Keep business and personal money in separate accounts if you can.
- Ask your CPA for a year-to-date P&L.
- Don't change how you file to qualify without talking to your CPA first. The tax savings may be worth more than a slightly better rate.
- Already own a home with equity? A self-employed HELOC may get you the cash you need without touching your first mortgage.
FAQ
Can you get a mortgage if you're self-employed?
Yes. You can qualify with tax returns, or, if your returns show too little income, with bank statements, a CPA-prepared P&L, 1099s, asset depletion, or the property's rent on an investment purchase.
How many years do you need to be self-employed to get a mortgage?
Usually 2 years. Some programs accept 1 year if you worked in the same field before you went out on your own.
Do self-employed borrowers pay higher mortgage rates?
Not with full documentation. Those loans are priced like any other. Bank statement, P&L and other alternative-documentation loans usually carry higher rates.
How much down payment do I need if I'm self-employed?
Full-documentation loans can go as low as 3% to 5% on some programs. Bank statement and other non-QM loans usually need 10% to 20% down.
Not sure which path fits?
Tell me how you're paid and I'll point you to the program that fits. Licensed in 23 states.
Get a Quote
NMLS #190235 · Direct HELOC lender across 23 states. Correspondent loans funded internally.
Talk to a licensed mortgage lender
Get a rate estimate or ask a question — direct answer from Audi Garner, Branch Manager & Broker (NMLS #190235). No sales pitch. No hard credit pull.
Get a 60-second rate estimate
Soft pull only. See your rate estimate instantly.
Ask Audi a mortgage question
Direct answer from a licensed originator. Usually within 1 business day.