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    Self employed mortgage

    Self employed individuals often ask … “Why is it so difficult to qualify for a self employed mortgage loan?

    Generally speaking, it is tougher to get a mortgage for the self employed buyer because it is harder to answer the question, "What is your income?" What did you really earn? How much did you write off, what were your expenses? What did you report to the IRS as taxable income?

    How Mortgage Lenders Calculate Self Employed Income

    This is a rather simplistic mile high overview, but basically lenders are going to look at your federal tax returns to see how much income your business brought in the front door. Then they are going to subtract your expenses. Whatever the bottom line is of income minus expenses, is your mortgage loan qualifying income.

    Taking advantage of tax laws to reduce income is great for reducing tax liability, but also shows you make less money, making a potential home mortgage loan approval difficult because you don't show enough income to qualify for the house payment.

    Lenders are looking to see a stable income history. Is your income increasing, decreasing, stable? If your income for the past two years was similar or increasing, we will average the two years income. If your most recent year of income is significantly less than the previous year, we will only give you the lower income.

    Self-employed borrowers, those who work on commission, or those who receive tipped income present one of the most challenging areas for mortgage loan underwriting. Qualifying self-employed people often requires significant extra time, energy, and patience. A fair and honest pre-qualification requires a special set of Loan Officer skills and expertise that most Loan Officers simply lack.

    Expert Review of Self-Employed Income

    The vast majority of Mortgage Loan Officers are afraid to work on a self-employed persons home loan simply because they lack the extra knowledge and skill set required to review complicated tax returns to determine a self-employed persons qualifying income. Long gone are the days when any low level application clerk type Loan Officer could simply ignore tax returns and give a low doc, no doc, or stated income loan to a self-employed borrower without any knowledge, training, or special considerations.

    Trusting any loan approval to an unlicensed bank Loan Officer, or some inexperienced application clerk is never wise, but this is especially true for self-employed people.

    Make sure you are working with an experienced self employed income expert like those of us here at The Joe Metzler Group to make sure everything is properly calculated, so you have no surprises down the road. 


    This is a basic documentation list for traditional regular loans for self-employed, and 1099 people.

    Because of the nature of these applicants, no lender is able to make any decision, not even a basic pre-approval without the following:

    • For self-employed: Two-years of self employed at the same company, doing the EXACT same line of work
    • For commission and tipped income: Two-year history of commission or tipped income. Preferably at the same company, but for sure in the same line of work, and at least 12 months at the same company.

    Be prepared to send us the following documents to prove self-employed income:

    • Last two years personal Federal tax returns (all pages, all schedules)
    • Last two years business returns if employed through a corporation (all pages, all schedules)
    • Last two-years 1099, K1, and any W2's
    • Unaudited Year-to-Date profit and loss (P&L) statement. Must be no more than 60-days old at the time of closing. (if you don't have one, search the internet for tips on how to make one, or just ask your tax preparer)
    • Most recent three months business bank statements

    OTHER INCOME (non-self employed jobs, or non self employed co-applicants)

    • Copy of most recent two (2) years W-2 statements (for you and any co-borrowers)
    • Copy of pay stubs covering the last (30) thirty days (for you and any co-borrowers)


    • Copy of most recent monthly bank statements (ALL PAGES. If it says "page 1 of 3", I need all 3 pages no matter what is on them).
    • Copy of most recent statements on 401K, IRA, or Mutual Fund Accounts
    • Copy of most recent brokerage statement for any stocks, bonds or certificates of deposits (or copies of actual certificate)


    • Copy of the Purchase Agreement
    • Your Realtor's contact information
    • If divorced…a fully executed divorce decree
    • If you've had a bankruptcy in the past 7 years... a full copy of the bankruptcy papers (including the discharge page).

    For a refinance...a copy of the most recent monthly statement.

  • Call Us to Apply

    Mortgage loan Officer

    Call the Joe Metzler team at (651) 552-3681 for a self-employed home loan mortgage quote. Speaking with a experienced Loan Officer is easily the best way to determine if you qualify based on your self-employed or commissioned income, and to obtain an accurate interest rate quote.

    Make appointment

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    Our Secure Online Mortgage Application is available 24/7. We do not charge any fees to apply for a loan, nor are you obligated to move forward once the application is complete. Once you finish the application, you will be given information on how to send or upload your supporting documentation.

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    no doc loans


    Many times as a self employed person, taking legitimate advantage of tax code to reduce your documentable income will make it difficult to get a standard home loan, as your qualifying income (on paper) is too low.

    Follow this link for no income documentation investor loans, bank statements for income, and 1099's for income alternative (also known as Non-QM loans.


    In years past, there were many mortgage loan programs designed for those people with difficult to document incomes. They were commonly known as no documentation, or stated income loans. These were unique loans for a very small number of people.  Unfortunately, they became abused by Real Estate Agents trying to make a sale, Loan Officers trying to earn commission, and primarily homeowners trying to buy homes they probably should not have been buying.

    Because of these abuses, and in response to the real estate collapse, the Frank / Dobb Financial Reform rules pretty much made these no documentation loans very difficult to find, and expensive to obtain in the traditional lending environment. To make it even worse, those same new rules have made all mortgage qualifying and underwriting dramatically more complicated, cumbersome, and annoyingly paperwork intensive.

    BANKS STATEMENT LOANS, No proof of income (investment property), and Asset based Loans

    Some non-conforming, non-tradition 'alternative' documentation loans do exist. It is not the same as the early 2000's, but there may be options for your situation, the most common of which is self-employed people showing little income due to write-off's.

    The most popular option today are bank statement loans [Read more on bank statement loans].

    Under the bank statement guidelines, you must be self employed for at least two-years, and able to document you are self employed (examples: license, registration with the state, certificate of assumed name, LLC or INC documentation) You must supply 12 months of bank statements. They will generally give you credit for 100% of personal bank statement deposits as income, or 50% of business bank statements as income.

    Under the asset based programs, loan qualifications are based on verified assets. Assets can be in the bank, 401k, stocks, bonds, etc. Asset programs are primarily for high net worth clients.

    Interest rates on these programs are significantly higher than traditional loans, and all efforts should be made to either get a traditional loan today, or to be in position to refinance into a traditional loan as soon as possible after getting a non-conforming loan.
    Stated Income  loans, where no proof of income required is also bank to a minor extent.

    True stated income loans are also back. They are hard to find, expensive, but most important, ONLY available for INVESTMENT properties.

    Call (651) 552-3681 or Chat Live with a Licensed Loan Officer.

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