Self-Employed Buyers

Self-employed borrowers have several loan options tailored to their unique financial situations. Conventional loans may be an option with strong credit and documented income via tax returns. Bank statement loans allow borrowers to qualify using personal or business bank deposits instead of tax returns. Non-QM (non-qualified mortgage) loans offer flexibility for those with irregular income streams or significant write-offs. FHA and VA loans remain accessible to self-employed individuals who meet standard guidelines. Each option has different documentation and qualification requirements, so working with an experienced mortgage professional can help identify the best fit.

Non-QM Loan Products for Self-Employed Borrowers

For self-employed borrowers, securing a mortgage can be challenging due to fluctuating income, tax write-offs, and complex financial structures that may not meet traditional lending guidelines. Fortunately, Non-Qualified Mortgage (Non-QM) loans offer flexible alternatives for those who don’t fit into conventional lending requirements.

What is a Non-QM Loan?

A Non-QM loan is a mortgage that does not conform to the standard underwriting guidelines set by Fannie Mae or Freddie Mac. These loans provide flexible qualification criteria, making them an ideal solution for self-employed individuals, business owners, and those with unique income situations.

Key Non-QM Loan Products for Self-Employed Borrowers

1. Bank Statement Loans

Instead of requiring tax returns, these loans use personal or business bank statements (typically 12 to 24 months) to verify income.
✅ No tax returns needed
✅ Ideal for business owners with significant write-offs
✅ Loan amounts up to $3 million in some cases

2. Profit & Loss (P&L) Statement Loans

Lenders accept a CPA-prepared or borrower-prepared P&L statement to determine income.
✅ Useful for borrowers with fluctuating income
✅ May require minimal additional documentation
✅ Helps those with large tax deductions

3. Asset Depletion Loans

For borrowers with significant liquid assets, this loan type allows them to qualify based on asset value rather than traditional income.
✅ Great for high-net-worth individuals
✅ Can be used for primary residences, second homes, or investment properties
✅ No employment or income documentation required

4. 1099-Only Loans

For independent contractors who receive 1099 income, lenders may use the past one to two years of 1099 forms as proof of earnings.
✅ No need for full tax returns
✅ Simplifies the qualification process for freelancers and gig workers
✅ Loan options available for both primary and investment properties

General Non-QM Loan Guidelines

Credit Score Requirements: Typically 600+, but some programs allow lower scores.
Down Payment: Ranges from 10-25% depending on the loan type and risk profile.
Interest Rates: Usually slightly higher than conventional loans due to increased lender risk.
Loan Amounts: Can range from $100,000 to $5 million, depending on the lender.
Prepayment Penalties: Some Non-QM loans may have prepayment penalties, especially for investment properties.

Who Can Benefit from a Non-QM Loan?

✔️ Self-employed professionals (entrepreneurs, business owners, freelancers)
✔️ Independent contractors (consultants, gig workers, 1099 earners)
✔️ Investors who need alternative income verification methods
✔️ Retirees or high-net-worth individuals using asset-based lending