Getting a Mortgage When You’re Self-Employed: What You Need to Know

If you're self-employed and thinking about buying a home, you’ve probably heard that it’s harder to get a mortgage. The truth? It’s not impossible, but it does look a little different than it does for someone with a regular nine-to-five job. The key is understanding what lenders are looking for and getting organized ahead of time.

So let’s walk through it together.

Why it’s different when you’re self-employed

When you work for a company, your lender can look at your pay stubs, W-2s, and job history to get a clear picture of your income. But if you own your own business or work as an independent contractor, it’s a little trickier. Your income might go up and down, and you probably write off a lot of expenses on your taxes, which can make it look like you earn less than you actually do.

Lenders want to feel confident that you can afford the loan and keep up with the payments. That’s why they take a closer look at your financials.

What you’ll need to provide

Here’s the good news. Being prepared can make all the difference. If you're self-employed, you’ll likely need to show:

• Two years of personal tax returns

• Two years of business tax returns (if you have an LLC, S-corp, or similar setup)

• A year-to-date profit and loss statement

• Bank statements for both personal and business accounts

• A copy of your business license, if you have one

• Any additional documentation that shows your business is active and doing well

If your income has stayed steady or grown over time, that’s a big plus.

What if I don’t show a lot of income on my taxes?

This is super common. A lot of business owners and freelancers write off expenses to lower their taxable income, which makes sense at tax time but can hurt you when applying for a loan.

One option is a bank statement loan. Instead of looking at your tax returns, lenders review 12 to 24 months of bank statements to calculate your average income based on what’s coming in. This gives a more accurate picture of your cash flow and is often a better fit for people who have solid income but a low taxable amount on paper.

Just know that bank statement loans usually require a higher credit score and a bigger down payment. Rates may also be slightly higher than a traditional loan, but for many buyers, the trade-off is worth it.

Can I qualify with only one year of self-employment?

Maybe, but it depends. If you have a strong track record in the same line of work before going out on your own, some lenders may accept just one year of self-employed income. For example, if you were a W-2 employee in marketing for five years and now run your own marketing business, that could work.

Still, two years is the gold standard, so if you're not quite there yet, it might be worth waiting or working with a lender who specializes in self-employed borrowers.

Tips to get mortgage-ready

• Keep personal and business finances separate

• Avoid large write-offs if you're planning to buy soon

• Stay current on taxes and avoid extensions if possible

• Keep detailed financial records

• Talk to a lender early so you know what to expect

Final thoughts

Being self-employed doesn’t mean you can’t buy a home. It just means your path might look a little different. The more prepared you are, the smoother it will go. There are great loan options out there for business owners, freelancers, and independent workers. You just need someone in your corner who knows how to navigate it.

If you’re not sure where to start, reach out. We work with self-employed buyers all the time and can help you figure out the best approach for your situation.