Mortgages for self-employed borrowers

Start with the tax-return option

If your tax returns show enough income, a conventional or FHA loan is usually cheaper. Lenders typically want two years of returns and can add back things like depreciation. Pete runs this first, because it’s often closer than people think.

How bank statement loans work

When write-offs make your returns look too thin, a bank statement loan calculates income from your deposits:

1. You provide 12 or 24 months of personal or business bank statements.
2. The lender totals qualifying deposits and, for business accounts, applies an expense factor (or uses a CPA-prepared expense ratio).
3. That average becomes your qualifying monthly income.

These are non-QM loans, meaning they fall outside the standard Fannie Mae and Freddie Mac rulebook. Pricing and down payment requirements are usually higher than conventional, but they open the door for people who would otherwise be told no.

Other ways to document income

• 1099-only: qualify using 1099 forms instead of full tax returns.
• P&L-only: some lenders accept a profit-and-loss statement prepared by a CPA or tax preparer.
• Asset-based: qualify using savings and investments instead of income.
• DSCR: for rental properties, qualify using the property’s rent. See DSCR loans.

What to gather

• 12–24 months of bank statements (all pages)
• Proof of business ownership, such as a business license, CPA letter or state filing
• Two years of tax returns if you want Pete to compare against conventional
• A current list of debts and assets

Don’t email sensitive documents through the website. Pete will send you a secure upload link.