Mortgage Loans for the
Self-Employed

For personal bank statements, the lender averages your monthly deposits over 12 or 24 months. For business bank statements, a standard expense factor (typically 50% of deposits) is subtracted to account for business operating costs, and the remaining average is used as qualifying income. Some lenders use a lower expense factor if you can provide a CPA letter confirming actual business expenses.

Yes, bank statement and non-QM programs typically carry a rate premium of 0.5-1.5% above conventional rates, depending on the lender, loan size, credit score, and down payment. The premium reflects the additional risk profile of alternative documentation. However, the ability to qualify at all, and access the property, often outweighs the rate difference, especially when the alternative is not qualifying at any conventional lender.

Yes, and many self-employed buyers use this strategy intentionally. Use a bank statement loan to purchase now, then refinance to a conventional loan in 1-2 years when your tax returns reflect higher income. This is especially useful for business owners who are growing quickly. Beeline can help you plan the eventual refinance path when setting up the initial purchase loan.

Most programs require 2 years of self-employment history verified by your most recent 2 years of tax returns. However, if you were previously employed in the same field and recently went self-employed, some lenders will accept less than 2 years with compensating factors (strong credit, large down payment, reserves). Talk to Chris about your specific situation, there's often more flexibility than borrowers expect.

Mixed income is actually common and can sometimes work with conventional financing, your W-2 income from a primary job is fully counted, and self-employment income (from a side business, freelance work, etc.) adds to it using standard tax return qualification. If your total qualifying income is sufficient with just the W-2 component, conventional may be available without bank statements at all. We analyze the most favorable approach for your specific income mix.

For bank statement loans: 12 or 24 months of personal or business bank statements, a CPA letter or proof of business existence (business license, entity documents), and a standard loan application. For conventional or FHA self-employed loans: 2 years of personal and business tax returns, a current profit and loss statement, and business bank statements. The list varies by loan type and lender.

Yes, if your tax returns show sufficient qualifying income. Conventional underwriting uses the 2-year average of your net income after deductions. The challenge is that many self-employed borrowers write off significant expenses, which lowers taxable income and qualifying income simultaneously. If your adjusted gross income is strong, conventional works. If write-offs reduce it significantly, bank statement or alternative documentation loans are often the better path.

It affects how income is calculated, which determines your maximum qualifying loan amount. Self-employed borrowers using tax returns qualify on net taxable income, not gross revenue. Those using bank statements qualify on average deposits minus an expense factor. Beeline reviews your specific financials to identify which documentation method produces the strongest qualifying income for your situation.

A 1099 mortgage is a specific alternative documentation loan that uses 12-24 months of 1099 income forms instead of W-2s or tax returns. It's separate from a bank statement loan but serves a similar purpose for independent contractors whose income shows clearly on 1099s. Not all lenders offer 1099 loans, but Beeline has access to lenders that do through the wholesale non-QM market.

Typically the same as a standard purchase, around 30-40 days once documents are submitted. The main variable is how quickly you gather bank statements and a CPA letter. Delays usually happen when statements are incomplete or deposits are inconsistent and require explanation. Starting the document gathering early keeps the timeline on track.