Conventional loans
Income is generally calculated from your filed returns, averaged across two years, with allowable add backs for items such as depreciation.
Ed Parcaut · Mortgage strategist · NMLS #235384
SELF EMPLOYED.
NOT HARD TO LEND TO.
If you own the business, your income story takes more explaining. That is a paperwork problem, not a disqualification. Let us look at your numbers before anyone tells you no.
Why it feels harder
THE WRITE OFFS THAT
HELP IN APRIL.
Every deduction that lowers your tax bill also lowers the income a conventional lender can count. Business owners are often surprised to learn a profitable company can read as a small salary on a loan file. Knowing that up front changes which options are worth pursuing.
Bank statement review programs
Certain lenders review business deposits rather than tax return income. Terms, rates, and requirements differ from conventional loans.
VA loans for self employed veterans
Self employment does not disqualify you from a VA backed loan. Documentation requirements are usually more detailed.
Program availability, rates, and requirements vary by lender and by your individual file. Nothing here is a commitment to lend.
What to gather
BRING THESE
TO THE TABLE.
You do not need everything before we talk. This is what a complete self employed file usually asks for, so nothing catches you off guard later.
- Two years of business and personal tax returns. Most loan programs review the full return, including schedules, to understand how your income is reported.
- Profit and loss statements. A current year to date statement helps show where the business stands since your last filed return.
- Business bank statements. Some programs review deposits over 12 or 24 months instead of tax return income.
- Proof the business is active. A business license, entity filing, or a letter from your accountant is commonly requested.
How long do I need to be self employed to qualify?+
Two years of self employment history is the common expectation. Shorter histories are sometimes considered when there is related prior experience in the same field, subject to the lender's requirements.
My tax returns show low income after write offs. Does that stop me?+
Write offs reduce the income a lender can count on a conventional loan, which is the most common surprise for business owners. Some lenders review bank deposits instead. We look at both before you choose a direction.
Do I need a bigger down payment?+
Not automatically. Down payment requirements follow the loan program and your overall file, not your employment type.
Will my business debt count against me?+
It depends on how the debt is documented and who is obligated on it. Bring the details and we will sort out what is likely to be counted.
Can we talk before I apply?+
Yes. The free 30 minute consultation exists for exactly this. No application, no credit pull, just a look at your situation.
Related reading
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