Self-employed & business owners

Your return shows what you wrote off. Not what you earn.

Good accounting and mortgage qualifying pull in opposite directions. Every deduction that saves you tax makes you look poorer to an underwriter reading your Schedule C. Bank statement programs exist for exactly that reason.

Estimate Your Qualifying Income Call (704) 287-8746

Same business. Two very different numbers.

This is the whole problem in one picture — an illustration, not a quote.

Tax return method versus bank statement method On the tax return path, gross receipts of 240,000 minus write-offs leaves net income of 62,000, about 5,167 a month. On the bank statement path, 240,000 of deposits with a 50 percent expense factor gives qualifying income of 120,000, about 10,000 a month. CONVENTIONAL — TAX RETURNS $240,000 gross receipts ↓ minus vehicle, home office, equipment, travel, depreciation, everything else ↓ $62,000 what the underwriter counts · ~$5,167/mo BANK STATEMENT METHOD $240,000 deposits over 12 or 24 months ↓ expense factor applied — often 50%, sometimes lower with a CPA letter ↓ $120,000 qualifying income · ~$10,000/mo
Same business, same year, roughly double the qualifying income. Illustrative figures — your expense factor depends on the lender and your documentation.

Bank statement income estimator

Rough out what a bank statement lender might count. Runs in your browser — nothing is sent anywhere.

Estimated qualifying income

$10,000

per month

Annualised$120,000
Existing monthly debts$900
Room for a payment at 45% DTI$3,600

A very rough guide. Actual expense factors, deposit eligibility and DTI limits vary by lender — transfers between your own accounts usually don't count, for instance.

Get a Real Number

Estimates only, for illustration. Not a loan offer, a rate quote, or a commitment to lend. Qualifying income is determined by the lender from your actual documentation.

There's more than one way to document you

Bank statement is the best known. It isn't always the right one.

Bank statement12 or 24 months of deposits. The default when write-offs are the obstacle.
P&L onlyA CPA-prepared profit and loss statement instead of statements. Fewer documents, tighter credit requirements.
1099 programsBuilt for contractors paid on 1099 — qualify from the forms themselves.
Asset depletionConverts a substantial balance sheet into qualifying income without selling anything.
Conventional with add-backsOften overlooked. Depreciation and other non-cash deductions get added back — sometimes that's enough.
DSCR, if it's a rentalBuying an investment property? Skip your income entirely and qualify on the rent.

Four lenders had already said no

A single mother, self-employed, trying to buy a home. By the time she reached me she'd spoken to four different lenders and been told her income didn't qualify.

Self-employed borrowers don't fit neatly into traditional guidelines, so I started looking for another route. As a broker I have access to more than 200 lenders, each with its own programs. After working through the options I found one whose guidelines fit her income situation. She got approved, and she got the house.

Four lenders had already told her no. I didn't have a magic trick and I didn't bend any rules. I just had more places to look and the experience to know what I was looking for.

That's the entire argument for using a broker when your income is complicated. 19 years in, the skill isn't knowing one program well — it's knowing which of two hundred lenders reads your file the way it deserves to be read.

Self-employed mortgage questions

How do lenders calculate income if I'm self-employed?

Two different ways, and which one you use changes everything. Conventional lenders start with your tax returns — usually two years — and use your net income after write-offs, adding back a few non-cash items like depreciation. Bank statement lenders skip the returns entirely and work from deposits into your account over 12 or 24 months. If you write off aggressively, those two methods can produce wildly different numbers for the same business.

What is a bank statement loan?

A mortgage that qualifies you on money actually landing in your bank account rather than the taxable income on your return. You provide 12 or 24 months of statements, the lender totals the qualifying deposits, applies an expense factor to approximate your costs, and the remainder becomes your qualifying income. No tax returns, no transcripts.

What expense factor will they use?

It varies more than anything else in the product. Business accounts commonly get a fixed factor around 50%, meaning half the deposits count as income. Many lenders will use a lower factor — sometimes far lower — if a CPA or licensed tax preparer provides a P&L or an expense-ratio letter. Personal accounts are often treated differently again, since the money has already left the business. Getting this right is most of the work.

How long do I need to have been self-employed?

Two years is the standard expectation. Some programs will look at one year with a strong file, particularly if you were in the same line of work as an employee beforehand. Less than a year is genuinely difficult on almost any program — worth a conversation rather than an application.

How much do I need to put down?

Typically 10% to 20%. Some programs go lower with strong credit and reserves, and pricing generally improves as you move up. Expect reserve requirements too — often several months of payments left in the bank after closing.

Will a bank statement loan cost me more?

Yes, and I'd rather you hear that from me. The rate is above conventional. The honest comparison isn't bank statement against a great conventional rate — it's bank statement against not buying, or against waiting two years to reshape your tax returns. Sometimes waiting is genuinely the better call and I'll say so.

What if I've already been turned down?

It happens constantly and it usually means the lender looked at one method. I had a self-employed borrower who'd been told no by four different lenders before she called me. There was no trick — a different program read her income differently. A denial is worth a second look before you accept it as the answer.

Are there options besides bank statements?

Several. P&L-only programs use a CPA-prepared profit and loss statement. Asset depletion converts a large balance sheet into qualifying income. 1099 programs work from your 1099 totals if you're a contractor. Conventional still wins for plenty of business owners whose returns look strong. Picking between them is the actual job.

Send me two years of returns and a guess at your deposits

I'll run both methods and tell you which one puts you in a better house.

Start Your Application Call (704) 287-8746