Skip to content
The Self-Employed Borrower
Menu

For the self-employed

Home loans, explained for people who sign their own paychecks.

Working for yourself doesn’t rule out a mortgage. A lender reads your income from your deposits, your books or your tax returns. Each guide works through one borrower’s numbers, line by line, so you can check yours.

Work out your incomeSee all calculators

Worked example

Owner-operator · 12 months

Omar drives his own truck. Here is what a lender counts.

Business depositsAverage $14,500

Average monthly deposits
$14,500
Fuel, repairs and insurance (CPA-confirmed)
−50%
Monthly income a lender counts
$7,250
Example figures, not a quote or an offer. Lenders set their own rules.
of bank statements is what many lenders read in place of pay stubs.
12–24months
to qualify without a W-2: bank statement, P&L, 1099 and asset-based loans.
4ways

How a lender reads your income

No pay stub? The math fits on one line.

$14,500

What reaches the account, averaged by month

50%

What the business spends, from a CPA or the lender’s own figure (the “expense factor”)

$7,250

The monthly income the loan amount is based on

Omar’s example figures. Bank statement, P&L and 1099 loans each get to this number a little differently.

Run it on your own deposits

Sole proprietors, 1099 contractors, freelancers, gig workers, creators and owner-operators: income that never arrives on a W-2.

  • Paid by the load

    Fuel and repairs come out of every deposit. A lender looks at what’s left.

  • Paid on commission

    Income lands in lumps. Lenders average it over 12 or 24 months.

  • Paid per project

    Invoices, not pay stubs. Your 1099s or your deposits show what you earn.

  • Paid by a platform

    Payouts from apps and marketplaces land as deposits a bank statement loan reads.

  • Paid from your company

    Write-offs shrink your tax return. Deposits or a P&L can tell the fuller story.

Check your numbers before a lender does

All free calculators

Income calculator

$14,500$7,250

a month, on Omar’s example deposits

See the income a lender would count

Your deposits, a P&L or your 1099s, turned into the monthly figure a lender works from.

Write-off calculator

$12,000−$1,000

a year written off, a month of income a lender loses

See what a write-off costs you on paper

When a loan uses your tax returns, every dollar you deduct is a dollar less income.

How every guide is made

“One business owner talking to another. Plain words, real numbers, no bank language.”
Read our editorial standards

  1. One borrower, every line shown

    Each guide follows one made-up borrower through the math a lender does, line by line, so you can swap in your own figures. Every example is clearly marked as one. It’s never a quote or an offer.

  2. Rules from the people who write them

    How income gets reported and counted comes straight from the IRS, Fannie Mae’s Selling Guide and the CFPB, not from another blog.

  3. A licensed loan officer signs off

    A licensed loan officer reads and approves every guide before it’s published. Their name, title and review date sit under “Reviewed by” at the end of every guide.

Common questions

Self-employed mortgage questions, answered

What people who work for themselves ask most before they talk to a lender.

Can I get a mortgage if I’m self-employed?

Yes. A lender needs to see steady income, not a W-2. Instead of pay stubs, it reads your income from your tax returns or, on a non-QM loan, from 12 or 24 months of bank statements, a profit and loss statement or your 1099s.

How do lenders calculate self-employed income?

On a loan that uses your tax returns, a lender usually averages the last two years of net business income, after your write-offs. On a bank statement loan, it averages 12 or 24 months of eligible deposits, then takes out an expense factor for business costs. The result is the monthly income the loan is sized on.

What is a bank statement loan?

A non-QM mortgage that qualifies you on 12 or 24 months of personal or business bank statements instead of tax returns. It suits borrowers whose write-offs make their taxable income look smaller than what the business actually brings in.

How long do I need to be self-employed to qualify?

Many lenders look for two years of self-employment. Some accept one year if you worked in the same line of work before going out on your own. Each lender sets its own rule, so ask before you apply.

Do tax write-offs lower how much I can borrow?

On a loan that uses your tax returns, yes: the lender starts from your income after deductions, so every dollar written off is a dollar less income. Some items, such as depreciation, may be added back. Bank statement loans look at deposits instead, so write-offs matter less.

What documents will a lender ask for?

It depends on the loan. Expect two years of personal and business tax returns, or 12 to 24 months of bank statements, plus a year-to-date profit and loss statement, proof your business is active (a license or a CPA letter), ID and statements for the money you’re putting down.

Are self-employed mortgages more expensive?

Not always. If your tax returns show enough income, you can qualify for the same conventional loans as anyone else. Non-QM loans such as bank statement and P&L loans often carry higher rates and need a larger down payment, in exchange for reading your income a different way.