Self-employed? Let’s talk mortgage options.
You run a business, you write off expenses like you are supposed to, and then a lender tells you that you do not make enough to buy a house. The problem is not your income. It is that you were shown one qualifying path when several exist. Dan Friel works self-employed files across 160+ wholesale lenders, including programs built specifically for business owners.
I can assist with your home loan in 49 states, excluding New York.
Turned down somewhere else?
Self-employed income gets read differently from lender to lender. Send me the letter and the reason they gave you. I'll take a second look and give you a plain-language answer in writing after reviewing your information.
Why good businesses look bad on mortgage paper
Traditional mortgage underwriting qualifies you on the net income your tax returns show, after every legitimate write-off. Vehicle, home office, equipment, meals, depreciation: each deduction saves you tax money and shrinks your qualifying income at the same time. A business clearing healthy six figures of real cash flow can show modest taxable income, and a retail bank will quote a loan size to match the tax return, not the reality.
Path one: full documentation, done right
Conventional, FHA, and VA loans qualify self-employed borrowers with tax returns, typically two years, though one year can work in some situations. Before assuming returns will not get you there, have someone calculate them correctly. Underwriting guidelines add back paper losses like depreciation and amortization, and a careful income workup frequently lands meaningfully higher than the bottom-line number a borrower expects. I run this calculation the way an underwriter will, before you shop for homes, so the pre-approval is real.
Path two: bank statement loans
Bank statement programs skip tax returns and qualify you on 12 to 24 months of business or personal bank deposits, with an expense factor applied for business accounts. They exist precisely for the business owner whose deposits tell a stronger story than their Schedule C. These are full legal mortgages with normal terms, offered by specialty wholesale lenders, priced for the documentation flexibility. For many Arizona business owners this is the difference between qualifying for the house they want and settling.
Other alt-doc paths
- 1099 programs: Contractors and commission earners can qualify on 1099 income directly, without full returns.
- P&L programs: Some lenders qualify on a prepared profit-and-loss statement, with requirements that vary by lender.
- Asset-based qualifying: Significant savings or investment portfolios can be converted into qualifying income through asset depletion programs, with no employment income at all.
- DSCR for investors: Buying rental property? Debt-service coverage loans qualify on the property's rent versus its payment and leave your personal income out of it entirely.
How to set your file up to win
Self-employed approvals are won in preparation. Keep business and personal accounts separate. Know what your year-to-date looks like before you apply. If you are planning a purchase next year, the structure of this year's tax return matters, and a conversation now can save you a program downgrade later. That planning conversation is free, and it is one I have with Arizona business owners every week. Reach out and bring your last two returns or your last year of bank statements, whichever tells your story better.
Frequently asked questions
How many years of self-employment do I need for a mortgage?
Two years of self-employment history is the standard for conventional, FHA, and VA loans, but it is not absolute. One year can work when the most recent tax return shows a full year of self-employment income and your prior work was in the same field. Alt-doc programs set their own seasoning rules by lender.
Can I get a mortgage without tax returns?
Yes. Bank statement loans qualify you on 12 to 24 months of deposits, 1099 programs use contractor income directly, asset depletion programs qualify you on savings, and DSCR loans for rentals use the property's income. These programs are offered by specialty wholesale lenders that Dan brokers to directly.
Do bank statement loans cost more?
They typically price above a comparable full-documentation loan because the lender is accepting alternative income proof. The honest comparison is the bank statement loan you qualify for against the smaller full-doc loan your tax returns support. For many business owners, the program flexibility is what makes the purchase possible at all.
My write-offs lowered my income. Can anything be added back?
Yes. Underwriting adds back non-cash deductions like depreciation, amortization, and depletion, and a correct workup of two years of returns often supports more income than borrowers expect. Run the real calculation before assuming you need an alt-doc program.
Should I file my taxes differently if I want to buy a home?
Talk to your CPA about your tax strategy, but timing matters: the returns you file this spring are the ones a lender will qualify you on. If a purchase is coming, a quick three-way conversation between you, your CPA, and your lender before filing can keep both your tax bill and your qualifying income where you need them.
Find the right income path for your mortgage
Your business is the asset. Let's qualify it properly.
Start your application in minutes, or grab a time and we will find the documentation path that fits how you actually earn.