Can Self-Employed Borrowers Get a Mortgage?

Yes. Self-employed borrowers can get a mortgage in North Carolina and South Carolina, and owning a business does not automatically mean you need a special loan or a larger down payment. Getting a self-employed mortgage comes down to documenting enough qualifying income for the loan program you choose.

Some buyers qualify using tax returns. Others may qualify through a bank-statement program that evaluates eligible deposits and business expenses. Either way, lenders also review credit, debts, available funds, and the property.

I’m Paul Mattos with Refine Mortgage and Carolina Home Financing. I help business owners, independent contractors, and other self-employed buyers compare mortgage options throughout Charlotte, Fort Mill, Rock Hill, and surrounding NC and SC communities.

Here is what to understand before you start shopping for a home.

What Counts as Self-Employment for a Mortgage?

For Fannie Mae conventional financing, a borrower with at least 25% ownership in a business is considered self-employed.

That can include sole proprietors, partners, and owners of LLCs, S corporations, or corporations. Receiving a W-2 from your own company does not automatically remove the need for a business-income review.

Independent contractors may also need self-employed income documentation. However, not every Form 1099 represents self-employment income; the lender needs to identify its source.

Start by explaining how your business is organized, how much you own, and how you get paid.

How Do Mortgage Lenders Calculate Self-Employed Income?

Your business revenue, taxable income, and qualifying mortgage income are different numbers.

For tax-return-based financing, lenders analyze the applicable returns and schedules rather than simply accepting your annual sales or the amount you transfer to your personal account.

For example, a sole proprietor’s Schedule C shows business profit or loss. The lender then applies permitted adjustments to determine usable cash flow. Certain items, such as eligible depreciation, may be added back, while nonrecurring income may need to be removed.

This is why neither “use my gross revenue” nor “use the bottom line on my tax return” tells the whole story.

A Simplified Example

Here’s a simplified illustration of how a lender might look at a sole proprietor’s income on a conventional loan. Actual calculations depend on the lender, the program, the income trend, and your complete tax returns.

• Two years ago, Schedule C net profit: $70,000, plus $8,000 of eligible depreciation added back = $78,000

• Last year, Schedule C net profit: $80,000, plus $8,000 of eligible depreciation added back = $88,000

• Two-year average: $83,000 per year, or about $6,917 per month

That monthly figure—not the business’s total sales—is the type of qualifying income figure that would be compared with your monthly debts.

This is only a simplified illustration. If income declined from one year to the next, the lender will look more closely at the trend and stability of the business. Depending on the circumstances and applicable guidelines, averaging the two years may not be appropriate.

Can Business Write-Offs Reduce Qualifying Income?

Yes, some business expenses reduce the income available for mortgage qualification. However, not every deduction receives the same treatment.

A business owner with substantial deductions should have the returns reviewed before assuming a conventional loan will not work.

Keep tax reporting accurate and discuss tax decisions with your CPA or tax professional. My role is to explain how mortgage guidelines treat the documented income—not tell you to omit legitimate expenses or change a return to obtain approval.

How Long Do You Need to Be Self-Employed?

Two years is a common starting point, but certain programs allow a shorter history.

For example, Fannie Mae may consider less than two years when the latest signed personal and business federal income tax returns show a full 12 months of income from the current business. The loan file must also document prior income at the same or higher level in a related field or an occupation involving similar responsibilities.

That exception does not mean every newly opened business qualifies. Review your exact dates, prior work history, business debts, and complete financial profile before relying on it.

There is also a separate Fannie Mae documentation provision that can allow a lender to use one year of personal and business tax returns in certain cases. The business used for qualifying income must have been in existence for at least five years, and the borrower must have owned at least 25% of it for the past five consecutive years. The lender must still complete the required cash-flow analysis.

You can review the current Fannie Mae guidance for self-employed borrowers.

What Documents Do Self-Employed Borrowers Need?

The checklist depends on your business structure and the selected loan. For an initial review, be prepared to discuss or provide:

• Complete personal federal tax returns, including relevant schedules

• Business returns and Schedule K-1 forms, when applicable

• Recent personal and business bank statements

• Evidence of business ownership and operation

• A current profit-and-loss statement or balance sheet, if requested

• Documentation of funds intended for closing and reserves

• Information about business debts and obligations

Tax transcripts may be used to verify return information. Some eligible conventional files allow reduced documentation, so ask for a checklist specific to your situation.

A CPA letter may help verify particular facts, but it is not a universal substitute for required income documents.

Send Complete Documents

Download complete statements and returns rather than sending cropped screenshots or only the first page. Include schedules and attachments requested by the loan team.

For more detail, read what bank statements mortgage lenders need.

Keep Current Business Records Available

A profit-and-loss statement summarizes revenue and expenses over a stated period. A lender may use it to evaluate whether the income shown on older returns remains supported by current operations.

Tell your loan team about material changes in the business early. A recent expansion, ownership change, or change in how you are paid deserves a conversation before an offer depends on the financing.

1099 Contractors, S-Corps, and LLC Owners

How your income is reviewed depends in part on how your business is structured and taxed.

1099 Independent Contractors

If you’re paid on a 1099 and report the income on Schedule C, lenders generally treat that income as self-employment income and use the applicable tax-return documentation to calculate qualifying income.

Some alternative-documentation programs can use eligible 1099 income rather than relying on the same tax-return calculation. Requirements vary by lender and program, so receiving a 1099 does not automatically mean you qualify for a 1099-based mortgage program.

S-Corporation Owners

If you own an S corporation and pay yourself W-2 wages, the lender may need to review both your wages and the business income reported through the S corporation.

Schedule K-1 income is not automatically the same as cash available to you. Depending on the circumstances and program, the lender may need to evaluate distributions and whether the business has enough liquidity to support the income being used.

LLC Owners

An LLC can be taxed in different ways, including as a sole proprietorship, partnership, S corporation, or corporation.

That means the mortgage documentation and income calculation generally follow the way the business files taxes rather than simply the letters “LLC” after the business name.

Tell your loan team how your LLC files taxes, your ownership percentage, and how you pay yourself from the start.

Mortgage Options for Self-Employed Buyers

Conventional Loans

Self-employed borrowers can qualify for conventional financing. You do not need to choose a bank-statement loan simply because you own a business.

I generally want to understand your eligibility for standard financing before comparing alternatives. Review my conventional home loan guide for NC and SC for the broader program requirements.

FHA Loans

FHA financing may be an option depending on your income, credit, debts, and property.

It still requires an income review and has its own mortgage-insurance rules. FHA should be compared with your other eligible options rather than assumed to be easier or less expensive.

My FHA home loan guide explains the program and costs to consider.

Bank-Statement Loans

Certain lenders offer programs that use personal or business bank statements instead of tax returns to calculate qualifying income. Programs commonly review 12 or 24 months of statements, depending on their requirements.

The lender evaluates eligible deposits and applies its method for accounting for business expenses. Business-account deposits are not automatically treated as personal income.

These programs still have qualification standards. Review the required down payment, reserves, credit profile, fees, rate, and loan terms alongside the income calculation.

Read my bank-statement loan guide for North and South Carolina for a closer look.

Other Non-QM Options

Non-QM means non-qualified mortgage. It describes loans outside the Qualified Mortgage category; it does not mean no underwriting or automatic approval.

Depending on the lender, alternative documentation may include eligible 1099 income, profit-and-loss documentation, bank statements, or assets. Consumer mortgages covered by ability-to-repay rules still require the lender to evaluate repayment ability.

My Non-QM home loan guide explains the broader options, and my specialized home loan guide covers additional financing paths for borrowers whose situation does not fit a standard mortgage.

Tax Returns or Bank Statements: Which Should You Use?

Start with an income review, then compare the loans you may qualify for.

A bank-statement program might support a different qualifying-income calculation, but that alone does not establish that it is the right mortgage.

Ask to compare:

• The income accepted under each program

• Required down payment and estimated cash to close

• Interest rate, APR, points, and lender fees

• The complete estimated monthly payment

• Applicable mortgage insurance

• Required reserves after closing

• Whether the rate or payment can change

• Any restrictions or costs that affect your plans

As a mortgage broker, I can compare options across multiple wholesale lenders. Their documentation requirements and methods can differ, particularly for alternative-income programs. That makes the actual file review more useful than choosing a program based on its name.

Can You Use Business Funds for Your Down Payment?

Possibly. When business assets are used, the lender may need to evaluate whether withdrawing them would harm the business.

Discuss the proposed source before transferring money. Keep records showing where the funds came from and how they moved.

Separate your personal homebuying budget from the money your business needs for payroll, taxes, inventory, and other operating expenses.

Mistakes to Avoid Before Applying

Estimating Qualification From Sales Alone

A strong revenue year does not tell you how much mortgage income a lender can use. Have the relevant documentation reviewed before setting a purchase budget.

Assuming Bank Statements Make Expenses Disappear

An alternative-documentation program still needs an acceptable income calculation. Ask how the lender evaluates expenses and which deposits qualify.

Changing Tax or Business Arrangements Without Planning

Consult your tax professional about tax decisions, and tell your mortgage team about planned changes to ownership, compensation, or business structure. Ask how the change could affect mortgage documentation.

Moving Money Without Keeping Records

Keep a clear trail for transfers and deposits. Before moving funds intended for closing, ask what supporting documents will be needed.

Treating a Pre-Approval as Final Approval

Ask what has actually been reviewed: your application, credit, income documents, or an underwriter’s assessment.

A pre-approval remains subject to its stated conditions. Updated financial information, the property, appraisal, title, and final underwriting can still affect the outcome.

What to Look for in a Mortgage Lender When You’re Self-Employed

Not every lender or loan program handles self-employed income exactly the same way. When you’re comparing mortgage companies, ask:

• Will someone review your complete tax returns before issuing a pre-approval, or are they relying primarily on income entered on the application?

• Can they compare conventional, FHA, and alternative-documentation options when appropriate?

• How will they treat depreciation, nonrecurring income, or a recent decline in business income?

• If you’re considering a bank-statement loan, how does that specific program calculate eligible deposits and business expenses?

As a mortgage broker, I can compare self-employed options across multiple wholesale lenders. That can be particularly useful when the same income profile may be treated differently under different loan programs or lender guidelines.

My Process for Self-Employed Mortgage Planning

1. Understand Your Business and Homebuying Goals

We discuss your business structure, ownership, income sources, buying timeline, available savings, and preferred monthly budget.

If you are relocating to the Charlotte area, tell me whether your customers, contracts, or business operations will change with the move so we can identify documentation questions early.

2. Review the Documents

I review the information needed to evaluate possible financing paths and identify questions that require lender or underwriter clarification.

The goal is to establish which income can be supported before you depend on a particular purchase price.

3. Compare Eligible Options

When useful, I prepare a side-by-side Total Cost Analysis showing estimated payments, cash needed, loan costs, and costs over a selected period.

We also discuss what the purchase would leave in your personal savings and business accounts. Estimates depend on the assumptions used and can change.

4. Review the Property Before an Offer

Send me the property you are considering so we can discuss its estimated taxes, insurance, HOA dues, and any financing questions.

Closing dates depend on documentation, appraisal, title, underwriting, lender requirements, and the purchase contract. We will discuss a realistic timeline for your file.

Questions to Ask Before Getting Pre-Approved

• Which income sources are you using, and how were they calculated?

• Have you reviewed the complete returns and relevant business documents?

• Does my ownership percentage affect the requirements?

• Could I qualify using tax returns before considering alternative documentation?

• If using bank statements, how are eligible deposits and expenses evaluated?

• What funds must remain after closing?

• Has an underwriter reviewed the income, and what conditions remain?

Already have a written mortgage proposal? You can request a mortgage offer review to discuss its costs, assumptions, and potential alternatives.

Self-Employed Mortgage FAQs

Can I get a mortgage with only one year of self-employment?

Possibly. Fannie Mae may consider a self-employed borrower with less than two years in the current business when the most recent signed personal and business federal income tax returns show a full 12 months of income from that business.

The loan file must also document prior income at the same or higher level in a field providing the same products or services, or in an occupation with similar responsibilities. The complete file still has to meet the applicable underwriting requirements.

Do lenders use my gross revenue or my net income?

For tax-return-based loans, lenders analyze the applicable tax returns and schedules and then make permitted adjustments to determine qualifying income.

Gross business sales alone are not qualifying mortgage income, but the calculation is also not always as simple as taking one net-income number directly from the tax return.

Can I get a mortgage if I just started my business?

Having less than 12 months of self-employment history can make standard financing more difficult because programs generally need enough documented history to establish stable and continuing income.

Alternative-documentation programs can have different requirements, so it is worth reviewing your actual business history, previous employment, income, credit, assets, and intended property before you start house hunting.

Is a bank-statement loan better than a conventional loan?

Not automatically.

A bank-statement program may produce a different qualifying-income calculation for an eligible self-employed borrower, but its down-payment, reserve, rate, fee, and credit requirements can differ from conventional financing.

I prefer to compare the available options before deciding which structure fits the borrower’s goals.

Plan Your Self-Employed Mortgage in NC or SC

You do not need to decide which loan program to use before we talk.

Bring your business structure, approximate ownership percentage, years in business, buying timeline, and preferred payment range. We can discuss the documents needed and compare financing paths based on your actual circumstances.

Schedule a mortgage consultation or start your mortgage application. You can also read reviews from past clients.

Paul Mattos
Mortgage Broker | Refine Mortgage
Carolina Home Financing
NMLS# 2339069 | Licensed in NC and SC
Call or text: 980-221-4959
Email: paulm@refinemortgage.net

Refine Mortgage Inc. | NMLS# 2417960 | Equal Housing Lender. This article provides general educational information and is not tax advice, a commitment to lend, a rate quote, or an offer of specific credit terms. Eligibility, income calculations, documentation, and program availability vary by lender, borrower, business structure, and property. All loans are subject to applicable credit, income, asset, appraisal, title, and underwriting requirements. Not all applicants will qualify. Refine Mortgage is not affiliated with HUD or any other government agency.