Self-Employed? Here's How to Get a Mortgage

The Self-Employed Mortgage Challenge

Self-employed borrowers often face a frustrating paradox: they may earn more than W-2 employees but appear to earn less on paper due to legitimate tax write-offs. Traditional lenders rely heavily on tax returns, which can understate your true income after deductions for business expenses, depreciation, and retirement contributions.

The good news? As a mortgage broker, Airus Lending has access to loan programs specifically designed for self-employed borrowers — programs that most banks don't offer.

Bank Statement Loans

Bank statement programs use 12 or 24 months of personal or business bank statements to calculate your income instead of tax returns. This is the most popular option for self-employed borrowers because it reflects actual cash flow rather than taxable income.

• 12 or 24 months of bank statements (personal or business)
• May use bank statements instead of traditional tax-return income, subject to lender guidelines
• Self-employment for at least 2 years (usually)
• Minimum credit score typically 660+
• Down payment as low as 10%

1099 Income Programs

If you receive 1099 income (independent contractor, freelancer, gig worker), some lenders offer programs that use your 1099s instead of tax returns to qualify. These programs average your 1099 income over 1-2 years and often require less documentation than traditional applications.

Profit & Loss Statement Loans

Some non-QM lenders accept a CPA-prepared profit and loss statement as the primary income documentation. This can work well for business owners who have strong income but complex tax situations.

Tax Return Strategies

If you plan to use a traditional loan program (conventional, FHA, VA), consider these strategies:

• Plan ahead: If you're buying in 2+ years, consider reducing deductions on upcoming returns to show higher income
• Two-year average: Lenders average your last 2 years of income — one strong year can help offset a weaker year
• Add-backs: Some deductions (depreciation, depletion, certain business expenses) can be "added back" to your qualifying income
• Business structure: How your business is structured (sole prop, LLC, S-Corp, C-Corp) affects how income is calculated

Documents Self-Employed Borrowers Need

• Business license or CPA letter confirming self-employment (2+ years)
• Bank statements (12 or 24 months) — for bank statement programs
• Last 2 years of personal and business tax returns — for traditional programs
• Year-to-date profit and loss statement
• Business asset documentation