Home loans for the self-employed
Buy the home your business can actually afford.
The write-offs that lower your tax bill also lower the income a traditional mortgage is allowed to count. Bank statement and Profit & Loss loans qualify you on the money your business brings in. For owners who write off heavily, that often means substantially more buying power than a tax-return loan.
One business, three ways to read it
$400,000 in annual deposits. $90,000 of income left on the tax return after write-offs.
Buying power review
See what you qualify for without tax returns
Justin will calculate your qualifying income three ways and send back the price range each one supports.
- No credit pull to start.
- Usually answered the same day.
- Two months of statements is enough for a first read.
The problem
Your tax return is doing its job. That is what shrinks your approval.
A good CPA spends the year making your taxable income as small as the law allows. Vehicles, equipment, depreciation, a home office, retirement contributions, the travel and meals that come with running a business. Each deduction is legitimate, and each one saves you money in April.
A conventional mortgage then qualifies you on exactly that number. The underwriter averages the net income from your last two years of returns, adds back a short list of non-cash expenses, and stops. Your revenue, your deposits and the cash you take out of the business never enter the calculation.
The better your tax planning, the smaller your approval. Owners who bring in several hundred thousand dollars a year are approved for a starter-home price, or told to report more income for two years and come back.
What a tax-return underwriter works from
- Sole proprietors and single-member LLCs: Schedule C net profit, line 31.
- S-corp owners: the W-2 wages you pay yourself, plus the K-1 income the business can support distributing.
- Partnerships: your share of K-1 income and guaranteed payments.
- A two-year average. If the most recent year is lower, expect the lower year to be used.
- Limited add-backs: depreciation, depletion, amortization and business use of home. Most other deductions stay deducted.
Example Schedule C, read by a tax-return loan
On a tax-return loan, every deduction you take comes straight out of the home you can buy.
At a 50% debt-to-income ratio, 20% down and a 6.5% rate on a 30-year term, with taxes and insurance at 1.5% of price per year.The fix
Two loans that count the income your business produces
Bank statement and Profit & Loss loans are non-QM mortgages built for self-employed borrowers. They still verify that you can afford the payment. They use different evidence: the deposits moving through your accounts, or a profit and loss statement signed by your tax preparer. Because both start from revenue instead of taxable income, the difference in buying power can be substantial. In the example above it is more than double. They are also currently priced almost the same as conventional loans.
| Feature | TraditionalTax-return loan | Non-QMBank statement loan | Non-QMProfit & Loss loan |
|---|---|---|---|
| What the lender reviews | Two years of personal and business returns, K-1s, W-2s, a year-to-date P&L and IRS transcripts | 12 or 24 months of personal or business bank statements | A 12 to 24 month profit and loss statement prepared by a CPA, EA or licensed tax preparer |
| Income that counts | Net income after write-offs, plus limited add-backs, averaged over two years | Average monthly deposits, less an expense ratio: 50% standard, as low as 15% for a service business with no employees | Net income on the P&L, after the expenses the business actually paid |
| Tax returns in the income file | Yes, verified with the IRS | Typically none | Typically none |
| Best fit | Owners whose returns already show strong, steady net income | Owners whose revenue reliably lands in the bank | Owners with uneven deposits, several accounts, or margins better than a standard ratio |
| Rate and terms | Conventional pricing, with the lowest down payment options | Currently priced close to conventional loans. Down payment often 10% to 20%, plus reserves | Currently priced close to conventional loans. Similar down payment and reserve expectations |
| Buying power when you write off heavily | Lowest | Often substantially higher | Often the highest when real margins are strong |
| Example business from above | $515,000 | $1,242,000 | $1,639,000 |
Example figures are estimated home prices for the same business with $400,000 in annual deposits. Program terms, pricing and guidelines vary by lender and borrower profile and change without notice.
Bank statement loans
Qualify on your deposits
A bank statement loan replaces your tax returns with 12 or 24 months of bank statements. The lender totals your business deposits, subtracts an expense ratio for what it costs to run the business, and treats the rest as your income.
How the income is calculated
- Collect the statements. 12 or 24 consecutive months, from personal accounts, business accounts or both.
- Total the eligible deposits. Transfers between your own accounts, refunds, loan proceeds and one-time deposits come out.
- Apply the expense ratio. 50% is the standard. It can be lowered to as little as 15%, based on your number of employees and type of business.
- Apply your ownership share. You are credited with your percentage of the business.
- Divide by the number of months. The result is your qualifying monthly income.
Personal or business statements
If you keep a separate business account and pay yourself from it, many programs will count the deposits into your personal account with no further expense ratio. With business statements, the full deposit history is used and the ratio is applied. Accounts that mix business and personal activity are treated like business accounts. We look at both and use whichever produces more income.
What underwriting looks at
- Steady or rising deposits. A sharp recent decline gets questions.
- Overdrafts and NSF fees. A clean 12 months matters.
- Large or unusual deposits. Anything out of pattern needs a source.
- Proof the business exists. Generally two years, shown with a license, a CPA letter or state filings.
- The rest of the file. Credit, down payment and reserves still count.
How your expense ratio is set
The expense ratio is the share of your deposits the lender assumes went to running the business. What is left is your income. The standard ratio is 50%. It can be lowered all the way down to 15%, based on two things:
- Number of employees. Fewer people on payroll means less overhead to account for.
- Type of business. Service work costs far less to deliver than a business with inventory, equipment or a storefront.
| Expense ratio | Income counted | Est. home price |
|---|---|---|
| 50%Standard | $200,000 | $1,242,000 |
| 30%Reduced | $280,000 | $1,771,000 |
| 15%Service, no employees | $340,000 | $2,167,000 |
The same $400,000 of deposits, with the same assumptions as the example above. On tax returns this business supports about $515,000. The lender sets the final ratio for your file and may ask your CPA or tax preparer for a letter to support it.
Try your own ratioNot sure what your deposits qualify for?
Send two months of statements and Justin will calculate your qualifying income, usually the same day.
Buying power calculators
Run your own numbers
Pick a program, enter your business figures and the net income on your tax returns. The estimate shows both answers side by side and updates as you go. Nothing is saved or sent unless you ask.
Your numbers
Your business
Total deposits into your business over the last 12 months, before expenses.
The share of deposits assumed to go to business expenses. 50% is the standard.
Your ratio may be lowerThe ratio can go as low as 15%, based on your number of employees and type of business. A realtor or other service provider with no employees can qualify at 15%. The lender sets the final ratio.
What the business spent to operate, as a share of revenue: $140,000 a year. Your preparer's P&L sets this number.
Real expenses, not a standard ratioA P&L loan uses the expenses your business paid. If you keep more of each dollar than a 50% ratio assumes, the P&L shows it. Lenders check that the figures are reasonable for your industry.
Only your share of the business income counts toward qualifying.
Below 50% ownershipLenders typically ask for a partnership or operating agreement, and sometimes the other owners' consent, to confirm your share and your access to the income.
Your tax returns
Your share, after write-offs. Schedule C line 31, or your W-2 wages plus K-1 income from the business.
Your household
A co-borrower's salary, pension, or rental income at about 75% of gross rent. Counted in full under both loan types.
Car loans, credit card minimums, student loans. Leave out your current rent.
Loan assumptions
A placeholder, not a quote. Bank statement and P&L loans currently price close to conventional loans, so the same rate is used on both sides of the comparison. Set it to the rate Justin gives you.
Estimated buying power, bank statement loan
$1,242,000
estimated home price
No credit pull to start. The application takes about 10 minutes.
Get this estimate checked against real guidelines
A calculator cannot see your statements. Apply, email, or text Justin and we’ll confirm the expense ratio your business supports, the rate for your profile, and the price range you can shop with.
No credit pull to start — reach out and we’ll settle on the documentation path together.
Rough estimates for education only. Both calculators assume a 50% maximum debt-to-income ratio, a 30-year term, and about 1.5% of the home price per year for property taxes and insurance. They do not include HOA dues, mortgage insurance, reserves, loan limits or every qualifying factor. The interest rate is a placeholder that you set, not a quoted or available rate, and it is applied to both loan types. This is not a pre-approval, a commitment to lend, or financial or tax advice. Bank statement and Profit & Loss loans are non-QM products. Rates, down payments, loan amounts, expense ratios and guidelines vary by lender, program and borrower profile and change without notice. Expense ratios are set by the lender based on your number of employees and type of business. The 50% standard and the 15% minimum are program figures, not a guarantee for any borrower, and supporting documentation from a CPA or licensed tax preparer may be required. P&L figures must be prepared by a qualified third party and are subject to lender review. All income must be documented and verified, and only your percentage of business ownership counts as qualifying income.
Profit & Loss loans
Qualify on your books
A P&L loan uses a profit and loss statement in place of both tax returns and a full set of bank statements. Your CPA, enrolled agent or licensed tax preparer prepares a statement covering the last 12 to 24 months, and the net income on that statement is the income you qualify on.
Why owners choose it
- Your real margin beats the standard ratio. A bank statement loan assumes a flat expense percentage. A P&L uses what the business spent. If you keep 65 cents of every dollar, the P&L shows 65 cents.
- Your deposits do not tell the story. Revenue arrives unevenly, across several accounts, or through merchant processors and a mix of checks and cash.
- Less paper. One statement from your preparer instead of 24 months of statements from every account.
What the lender verifies
- The preparer. An active CPA, EA or state-registered tax preparer who prepared or reviewed the figures.
- The numbers. Revenue and expenses that are reasonable for your industry. Some programs ask for two or three months of bank statements to confirm revenue.
- The business. Generally two years in operation, plus your ownership percentage.
Bank statement or P&L?
Take a business with $400,000 in revenue that spends 35% of it to operate.
| Method | Income counted | Est. home price |
|---|---|---|
| Bank statements, 50% ratio | $200,000 | $1,242,000 |
| P&L, actual 35% expenses | $260,000 | $1,639,000 |
The P&L counts $60,000 more income for the same business. A lower expense ratio can close or reverse that gap: at 15%, the bank statement loan counts $340,000. We calculate both before you pick.
Which path fits
How this works for your kind of business
Sole proprietor or 1099 earner
Schedule C filers usually see the widest gap between deposits and taxable income. Bank statements are the usual starting point. A realtor, consultant or other service provider with no employees can qualify at a 15% expense ratio.
S-corp or LLC owner on a modest salary
Your W-2 understates what the company earns for you. Business bank statements or a P&L count the company's income at your ownership share.
Partner or co-owner
Income is counted at your ownership percentage. Below 50%, expect to provide the operating agreement and possibly consent from the other owners.
Self-employed for one to two years
Tax-return loans generally want a two-year history. Some bank statement programs accept one year in business when you have prior experience in the same field.
What to expect on rate and terms
Self-employed loans are currently priced almost the same as conventional loans. Qualifying on your deposits or your P&L does not mean paying a premium rate. What differs is the structure: a down payment that is often 10% to 20%, and several months of reserves in the bank after closing. Pricing moves with the market and with your credit, down payment and property, so ask us for today's numbers on both.
Before you apply
Six things that make your file stronger
Separate business and personal money
Clean accounts make deposits easy to count and can qualify you under more favorable personal-statement rules.
Leave your accounts alone
Opening, closing or switching banks mid-process adds statements to collect and explain.
Avoid overdrafts
Keep the 12 months before you apply free of NSF fees and negative balances.
Make transfers traceable
Money moved between your own accounts is not income, and large unexplained deposits get questioned.
Bring in your CPA early
They may need to write an expense letter or prepare the P&L. A week of notice keeps escrow on schedule.
Talk to us before you file
If you plan to buy within a year, know which loan you will use before your next return goes in.
How it works
From first call to keys
A 15-minute call
Tell us how the business is structured and what you want to buy. No credit pull.
Statements or a P&L
Two months is enough for a first read. We calculate your qualifying income, usually the same day.
An approval you can shop with
We document the file up front, so your offer is backed by numbers a listing agent can rely on.
A fast closing
Our team is built around quick closings. A non-QM file does not have to mean a slow escrow.
Already found the house?
Start the secure application now and we will pick the documentation path with you.
Common questions
What business owners ask us
Can I buy a home if my tax returns show low income?
Often, yes. Write-offs lower the net income on your returns, and that is the income a traditional loan uses. Bank statement and P&L loans look at your deposits or a prepared profit and loss statement instead, which usually reflects a much higher qualifying income.
How much more can I qualify for?
It depends on the gap between what your business brings in and what your returns show after write-offs. The wider the gap, the larger the difference. In the example on this page, the same business supports roughly $515,000 on tax returns, $1,242,000 on bank statements and $1,639,000 on a P&L. Your numbers will differ, and the calculator shows both answers for your business.
Is this a stated-income loan?
No. Lenders still have to verify that you can repay the loan. These programs document your income with bank statements or a preparer-signed P&L in place of tax returns.
Are the rates higher?
Not by much right now. Bank statement and P&L loans are currently priced almost the same as conventional loans. Rates change daily and depend on your credit, down payment and property, so ask us for a side-by-side quote. Down payments are often 10% to 20%.
Do I have to provide tax returns at all?
For the income calculation, typically not. Most bank statement and P&L programs do not ask for returns or IRS transcripts. We settle on the documentation path with you before anything is submitted.
Bank statement or P&L: which gives me more?
Whichever shows more income. If your business qualifies for a low expense ratio, bank statements often come out ahead. If your ratio stays near the 50% standard and your real costs run lower, a P&L often does. We calculate both.
What expense ratio will my business get?
The standard is 50%. It can be lowered all the way down to 15%, based on your number of employees and the type of business you run. A realtor with no employees can qualify at 15%, and so can other service lines of work run without staff. Businesses with payroll, inventory or equipment land higher. We tell you the ratio your business supports before you apply. See what the ratio does to buying power.
How long do I need to be self-employed?
Most programs want two years of self-employment, verified with a business license, a CPA letter or state filings. Some accept one year when you have prior experience in the same line of work.
Can I add a spouse's W-2 income?
Yes. A co-borrower's salary, pension or rental income can be combined with your business income. Their debts and credit become part of the file too.
Will one of these loans change my taxes?
No. The loan does not change what you file or what you owe. For tax questions, talk to your CPA.
Do these loans work for refinances, second homes and rentals?
Yes. Both are available for purchases and refinances, including cash-out, on primary homes, second homes and investment properties, with terms that vary by occupancy. For a rental, a DSCR loan that qualifies on the property's rent may fit better. Try the DSCR calculator.
Self-employed buying power review
Find out what your business qualifies for
Tell us a little about the business. Justin will come back with your qualifying income on tax returns, bank statements and a P&L, and the price range each one supports. Usually the same day, with no credit pull to start.
I help self-employed buyers count the income their business actually brings in — bank statements, a profit & loss statement, or tax returns — and give you honest numbers before you apply, with a documentation path we settle on together.
Three ways to start
Apply now, or email or text Justin directly — usually answered the same day.
No credit pull to start — reach out and we’ll settle on the documentation path together.