Is There Mortgage Help For The Self-Employed?

by on January 24, 2012Tim Houghten

While mortgage rates remain at record lows, major news corporations have continued to report on how much tougher it has become for borrowers to get approved for home loans today. So what options and mortgage help is really available for the self-employed right now?

mortgage help for self employedBusiness owners and other self-employed individuals have often found it more difficult to obtain mortgage financing than their salaried counter parts. This is largely due to the income and employment verification requirements and underwriting guidelines which need to be adhered to. Unfortunately, while these individuals may enjoy great income levels, verifying income can present an array of hurdles when it comes to getting mortgage help for the self-employed.

Even those who have established businesses and verifiable evidence of their income have been held back due to the way in which their income is calculated by lenders. This is because most lenders and loan programs base their income on the net, adjusted gross income on tax returns, which obviously is kept as low as possible to minimize tax liabilities. It is a catch-22 situation. Take fewer deductions, show more income, qualify for a larger mortgage and pay more taxes, or take as many deductions as possible and limit your home loan options.

During the recent housing boom we saw the introduction and growth of stated income mortgage loans. Sometimes demonized in the press as “liar’s loans” and lumped in the same category of subprime mortgages which were blamed for the bubble, these loans were hugely popular with the self-employed. It enabled them to state their real income without having to pay more taxes and they would get into great stated income home mortgage loans with less money down and better rates.

Unfortunately, criticism and abuse of these loans as well as the ensuing regulations have essentially made stated income home loans illegal for the most part. Laws in states like Florida now specifically require that lenders request and consider proof of income when offering mortgage help for the self-employed.

However, exactly what documents are required to verify self-employment today can vary widely between lenders and the type of loan is being applied for. Those seeking to purchase new homes with conventional or FHA mortgage loans are required to submit copies of tax returns for the last two years and execute a 4506T, which enables lenders to verify them. In order to qualify, the net, adjusted gross income for the last two years is averaged unless the most recent year shows declining income, in which case the lower number will be used. The new debt-to-income ratio (DTI) cannot exceed 50 percent of the borrower’s monthly income.

However, in a recent interview, 20-year veteran mortgage professional, Lenny Silvestri Jr. of Alternative Mortgage Group in Boca Raton, FL revealed that there are more options. Firstly, he pointed out that an experienced and knowledgeable loan officer can help borrowers to increase the amount of their income that can be used to qualify by adding back items like depreciation and salaries which were paid to them through their businesses. Lenny also unveiled the fact that there are some alternative loan programs which will accept copies of bank statements and use deposit amounts to verify income versus tax returns. This is the perfect solution for those who have cash businesses or have been a little slow on filing their taxes or who simply have great accountants who have been able to minimize their tax liabilities. Of course, this type of mortgage help for the self-employed does come with above market mortgage rates, and while it may be a great way to cash in on the many current bargains on the housing market, the pros and cons should be weighed carefully.

It is important to recognize that the rules for refinancing can differ, especially when it comes to mortgage help for the self-employed who qualify under the government’s Making Home Affordable initiatives. A call put into Bank of America’s mortgage hotline revealed that, providing all other eligibility requirements were met, proof of self-employment and income may be simply limited to needing to provide a copy of a valid business license.

The bottom line is that anyone who is self-employed and who is considering purchasing a new home or who is interested in refinancing may find it a lot easier than they think if they take a few moments to speak with an experienced mortgage professional. Certainly, between historic lows on mortgage rates and rock bottom home prices, the opportunities for reducing housing payments and locking into great deals are just too great to let pass by without at least trying to take advantage of them.

{ 73 comments… read them below or add one }

Betty January 25, 2015 at 10:05 pm

Hello I’m Betty & i need help! My boyfriend & I want to buy a house, but i heard you need either 2 years of w2 or 2 years of 1099. The thing is that for 2013 my bf got w2, but for 2014 he got the 1099!! I mean is there something that can be done?? We really want to buy a house already Please help


Luis Sanchez January 16, 2015 at 11:39 am

We have a business at home and no qualify for refinance using tax return. Is there any lender in California who will accept W-2 forms instead tax returns we have good credit


george vaziri January 11, 2015 at 12:44 pm

we are a self employed looking to refinance our home with at least 40% equity, we are looking for 5 years adjustable rate and with no income verification, we are paying almost 6% on 660,000 mortgage that we got on 2008, we need help .


Mark Elliott January 4, 2015 at 7:07 am

I am not self employed but due to the line of work I am in, I file taxes as a “statutory employee”. This means I am a full time employee with verifiable income on a W2, but I can claim un-reimbursed work related expenses for deductions on my taxes. Last year my work expenses, less my stipend, left a balance of over 14k in un-reimbursed expenses. This 14k represents the mileage allowance on my vehicle and NOT a reduction in cash flow. I work in a very rural state, Maine. Unfortunately, this 14k reduces my AGI and throws my ratios through the roof. Lenders immediately put up a wall when they see my AGI and I am left out of any options. Where do I go from here?


L January 16, 2015 at 1:33 am

Hi . I’m a mortgage broker. Many brokers and loan officers do not know how to calculate self-employed income or income that isn’t straight W2. If you used form 2106 to calculate the business miles then you can add back 23 cents per mile (business miles only). This form would still transfer to the unreimbursed business expense line on Schedule A. If you wrote off $14,000, your business miles are about 25,455. You can add $5854 back to your total income in this scenario.


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donna heil October 26, 2014 at 5:03 am

I’m self employed. I live in Maryland. Can you help me or refer me to someone that can.


Lisa October 4, 2014 at 7:08 pm

We are looking to sell our home and purchase a new one. My husband is self-employed LLC with a schedule C and I have a very good salary. We are now having a hard problem qualifying due to “low” income because his write offs count against OUR income. We will be putting 30% down but that does not matter. Credit scores are 670 and 711 but that does not matter. Can anyone PLEASE help me find a no income verification mortgage company??? What are the rates usually? Thank you!


jim September 11, 2014 at 6:46 am

i own a business and do well 500k annually i have 3 properties i own out right combined worth of about 1.3 million. Im an llc in nj they say i cant take a paycheck beings im an llc, i need to take owners draws . So everytime i go to the bank to apply for a loan i get shot down, so i always pay cash , what do i need to do to change this. i have plenty of equity , and dont understand the problem, anyone have any advice.


Frank D August 19, 2014 at 7:11 am

I am 33% owner of a business and want to buy a home, but as a corporation we don’t give out financial information being an S-Corp. This is something we have agreed on in our partnership. Is there away to purchase the home with just personal W2 information, based on these new laws?


Danielle July 24, 2014 at 10:56 am

I may be able to help if you’re self employed and located in either NC or TN. Call – 704-543-1610 and ask for Danielle.


Sandra July 24, 2014 at 7:32 am

Both my husband and I are self employed.
Gross income 50,000 a month net 40,000.
Hardly any debt, at least 30% ready to put down,
Businesses established over 15 yrs ago, credit scores
780 and 650. Are we to expect difficulties?


Karrie May 2, 2014 at 7:28 pm

My husband and I are self employed and we would like to purchase a new home while keeping our current one to rent out. My husband is VA loan eligible so we can do a smaller down payment but how difficult will it be to get a second mortgage when we made 86K last year and the home we are looking at is 190,000.


Karrie May 2, 2014 at 7:40 pm

Forgot to add that I have a 829 FICO score and he has a 751, if that helps.


hex April 22, 2014 at 6:46 pm

I have income of more of three years in Mexico and the last year in USA I want to purchase a home under FHA is valid my income to prove the two years that is require ?


Larry Gray April 24, 2014 at 11:20 am

We have no problem with allowing for your employment for three years in Mexico.
We simply need to verify at least one year through sending our employment verification request. We can then use your current USA income to qualify (assuming w-2 employment.)


Robert March 15, 2014 at 8:41 am

I would like to refinance my house to get a lower rate and consolidate some other credit cards. I ‘am retired and live off rent income. My taxes show little or no income. I have been to two banks and they will not let me do it. My credit rating is over 775. I showed them my income on bank statements. They said if it is not on your taxes, they can not us it. I owe 70 thousand on my house and it is worth 150. With this new law that government but in on the first of the year. They say they can’t do anything. There has to be something out there for people like us?


Ernest Penn January 9, 2014 at 6:10 am

There is a product, that is available to home buyers and owners, that are self employed for 2 years. They can use 1 year tax returns. This exciting programs provides a path of home ownership to those self employed, buyers who may have had a down year due to explainable events. But were denied due to the averaging method of analyzing income. I believe that is a great opportunity for buyers and home owner with very strong factors. “Knowledge is a Key” that can be shared, what are your thoughts?


Erica January 27, 2014 at 12:21 pm

This request is for Ernest Penn or anyone that can email me with information about the business owner loan program he mentioned? I am trying to prepare for a possible move to a lake house. So far we have a home that would need to be sold…or? and the seller of the lake home is open to a land contract deal (if no one buys it this spring). We are business owners and I worry that if we go the “traditional” two year route….and as/if the interest rates rise over the next two years, we may be slightly over budget which is what I don’t want. Any comments or suggestions will be appreciated. Thanks


Matt Krupa March 30, 2014 at 10:10 pm

Can you post the names of the companies that are allowing one year tax return?


Brodie Foster February 6, 2014 at 2:15 pm

Ernest Penn,

My partner and I are wanting to buy our first home. We have been renting in the same apartment complex for about 5 years now. We both work jobs were we receive a w-2 each year. He makes about 24k a year and I make about 21k a year on our w-2′s. But I have a property maintenance business which I started showing on taxes last year. After taking all the deductions and writing off expense to reduce my tax liability it shows me only making very little money at all on the bottom line. This year I had all my equipment and vehicle stolen and I will have to write that off in order to recoup some of that money to buy new equipment for this year. We have applied at one place ” quickenloans” and they said we didn’t show making enough money to purchase a house. If I wouldn’t have taken all the deductions and wrote off everything we would be fine, but is there anything we can do to get a home? we have been paying $750 a month for our 650 sq ft apartment for a while now.
Any and all help is so thankful, Brodie Foster.


Stuart Polsky May 22, 2014 at 9:07 pm

I would like to know the Product that is available for the self employed
Which allows them to use the recent one year tax return to qualify for a mortgage

Thank you


liz August 27, 2013 at 12:04 pm husband and I built a home 12 years ago..we are self employed..we put 20%
Down with a no-income varification mortage but its at 6.5 % interest
We’ve never been late..our credit rating is in the high 600′s to low 700s.we would love
To lower our rate..but so far the mortage companies said our debt to income. Doesn’t meet the standards..our we need to show.a lot more income on our returns?? We are heart broken
And disguised that people who don’t pay their bills and owe more then their house is worth are able to get approved and we aren’t..btw our house is worth at least $100.000 more than we owe.please give us some info needed to be able to refi asap thanks!


Nicole July 8, 2013 at 2:27 pm

I moved to Florida in July 2012 Sold my home in South Carolina want to buy a home in Florida and have 50.000 to put down I am self employed and have been for 8yrs in South Carolina and 1yr in Florida have 695 score and need to secure financing owned homes for 17 yrs do you know where I can get it.


Sanah June 28, 2013 at 9:57 pm

Hi me and my husband are planning to buy a house.
We are planning to sell our ancestral property in our
Back home and we can have the funds to buy a home here
In u.s. but then the problem would be “how would we show
The proof of funds?” Any advise ? :)


James Wade June 19, 2013 at 2:21 pm

Same Problem. You mention Bank of America in your article. I just tried to refinance with them. Gave them two years worth of tax statements showing W2 income and 1099 income over 6 figures. Gave them bank statements for the past two quarter. Paid them $500 to appraise my house. They sent out the appraiser, only to tell me that same week that my income proof wasn’t enough. I moved to 1099 to make more money and write-off expenses, past 8 months….. Been in my Industry for over 30 years, can show tax returns for the past 10 years of 6 figures…go back and forth between W2 and 1099, depending on what contract companies want to pay. BOA turned me down.

What to hear something funnier? My current loan, which I was trying to get the interest rate lower, is financed with BOA…. I’ve paid the mortgage faithfully on-time with them for over 5 years, since they took over Countrywide.

Any suggestions on lenders that will work with someone like me, good income, good tax returns, good payment history on current loan.

Thanks J


Shelly July 5, 2013 at 6:55 pm

Hi James,

Did you ever get a suggestion? I am in the exact same boat. Hi wages, showed that I have continued to make said wages for the first half of this year. But because I am self-employed and worked for a brief time LAST YEAR where I got a W2 in addition to the 1099 I could not qualify. This would have been my 3rd home purchase, I have low debt and great credit.

I wish there was a mortgage lender that specialized in this type of thing. I work in the tv/video industry and I am certain there are a lot more people out there who are in similar situations who are as frustrated as we are.


Nicole September 11, 2013 at 5:31 pm

Dont know where you live or if youve gotten to buy a home since this post but my mortgage advisor is the greatest ever! Im self employed and was upside down in my condo, needed a stated income loan to refinance no one could help me but I found her and she got it done!!! anyway her name is Cindy Hill: (209) 327-1336 she works for Alpine Mortgage in Lodi, Ca. Id give her a call if you cannot get help anywhere else.


Jessica B March 29, 2013 at 7:54 am

My husband and I are getting out of pastoring and moving to a more permanent job in a different state. We were hoping to buy a house but after reading this I have no hope. We won’t be in the same industry and we are partnering with a friend for his business he already has up and running but we will be considered self employed. Is there anything we can do?


Carol A Johns March 9, 2013 at 4:00 pm

My husband and I want to buy a house. I have scores over 670 but his scores are 598/602. However I have recently moved to Florida although I have been self employed for 15 years and have tax returns showing ago of $49 to $59 thousand, revenue for 2011 and 2012 reply AGI of $28. My husbands income is better than mine at $69 thousand for combined income of $97 thousand. A stated loan would be great, have used them in the past) what other products can help us?


Katie March 8, 2013 at 7:39 am

I started my own law firm in Florida in June 2012. My husband is also self employed. We want to buy an empty waterfront lot that is now on the market for a ridiculously low price. The asking price is at least $100k below appraised value (owner’s biz going down tubes and needs to sell). With that built in equity, shouldn’t a lot loan from a bank carry less risk as they would own the valuable land if we default? I REALLY want to purchase this lot and hold it for our dream home down the line. ANY financing suggestions would be appreciated. We re-fi’d our home to a 15 yr. note to get our house in order before I left my old law firm and paid off all other debts, but I didn’t expect this property to come up for sale and not be able to qualify for financing b/c I haven’t been in biz. for 2 years. Help :)


Shannon O'Brien March 8, 2013 at 1:02 pm

Wow, Katie, sounds like the dream of a lifetime. I am assuming by “old law firm,” you mean that you were an employee and you’ve only been self-employed since 2012. If that’s the case, you’ll have trouble getting a loan.

I’m not saying it’s impossible, but the lender will probably look at the business being new as a high risk. Even if you can find someone that will lend to you, it may be quite expensive.

I wish I had better advice for you, Katie. Keep contacting lenders. Maybe you’ll hit on one that will do it.


mark February 28, 2013 at 3:37 pm

I live in Texas. I own outright a home worth 600,000. I have 165,000 equity in a commercial 4,400 sq. ft building that houses our two businesses. Our credit scores are 720 and 718. We have been living off investment income and our 10 and 11 tax returns show losses due to us developing our businesses and carry over losses from the 08 debacle. We are wanting 250,000 to pay off our only debt, 50,000 in credit cards and 1 server computer note. Both cars paid for. Business just starting to make money last quarter of 12. Any ideas ????


The Team February 28, 2013 at 7:19 pm

Hi Mark,

We’re not qualified to comment on your specific situation and thus would advise you to discuss the situation with your accountant.

Best of luck to you!


Brandon January 23, 2013 at 9:10 pm

I’m in the same boat. I’ve been self employed for 4 years in field service, so the standard mileage deduction sucks down a whole lot of what income is taxable. The only solution I see at this point for myself is to file a return without a Schedule C, close, then file an amended return. I’m going to talk with a lawyer to find out more, but since the mortgages that were in place for the self employed are now illegal, we are stuck. Good luck all.


Lisa February 24, 2013 at 6:02 am

Just curious…did you speak with a lawyer about this approach? In the same situation and considering my options.


Amy January 20, 2013 at 6:29 pm

My husband and I are looking to purchase our first home. We are both working full time jobs and are currently paying 700.00 in rent each month. Becasue my husband works for a builder who requires each employee to work as a sub contractor, he is considered ‘self employed’. We recently moved back to our home town this summer and began working in our current jobs this August. We were informed that because my husband is ‘self employed’ and he has only been so for 6 months, we will not be able to use his income. Based just on my income, because of my student loans and a car payment, we were told we will not qualify for any financing. However, we were informed that a lender can use the last 3 years of my husbands tax returns to create an overall average income. I was told that it would be an uphill battle to get someone to do this for us. So my question is, is this the end of the road for us? Or is it possible that we can use some kind of income for my hard working husband? It is so frustrating that we are being told that we cannot afford a mortgage, when our rent alone is the cost of a mortgage! Not to mention that we pay all our loans and bills on time and pay much extra on all of our loans. :0( Any help would be appreciated!


Elaine January 8, 2013 at 9:23 pm

I am a single parent trying to refinance an owner occupied multi-family. I have good credit, never late on any mortgage or other payments, good loan to value. My issue is the gross income from my home is not considered only the net. My tax accountant takes the maximum allowable deductions and that seems to be stopping my ability to refinance. I was told by a lender today that the Fanny Mae guidelines are what restrict my ability to refinance. Can someone advise me of a company that could refinance my property???


Jesse Deleon January 4, 2013 at 7:14 pm

Hello i have a question i am self employed i purchased the buisness from my father in jan 2012 i have owned for a year but i have been working with my father for about 6 years and he has been paying me with a 1099 at the end of the year but i was also going to school full time for the the year of 2010 and 2011 and i graduated will i get any credit for that because i was only working part time and my incomes for those 2 years are like 14-16000 so my question is if there is anywa of me getting a mortgage loan with only having buisness in my name for a year but working with company for about 6 yrs also is there anyway to use my fathers past returns and my new one so it can see that buisness and money is increasing or at least staying the same if somebody can please help me out thanks


Shannon O'Brien January 5, 2013 at 12:06 pm

I’m no mortgage expert but it seems to me that the 1099 would prove self-employment, and as long as it’s within the same line of work as the new business, you just might qualify. Not sure if your income will qualify or not, but, as you said, your dad’s paperwork can prove how much you’ll make as the owner.

Worth a shot at any rate.

Make an appointment with a mortgage broker to find out for sure. Best of luck Jesse!


Lauren December 12, 2012 at 5:44 pm

I have owned my own company since September 2011. We went to chase for a mortgage loan and they told us that we needed two income tax returns to show proof of our income. Well when we file in February we will have two income tax returns to show to prove we can afford a house. But my question is this -our first income tax return only shows September 2011- December 2011. Can we still get approved for a loan if we have two income returns but have not officially been opened for two years yet?


Shannon O'Brien December 14, 2012 at 12:40 pm

Hi Lauren,

Lenders typically want to know that you have been self-employed for two years and your tax returns are the way to prove that.

It appears that your returns, after you finish the one for 2012, only prove a self-employment history of 15 months. It will be challenging to find a lender willing to give you a mortgage on that basis.

Hope this helps.


imtiaz December 12, 2012 at 10:33 am

i started my company this year on jan,i want but house i have good credit and i can put down payment 35% down payment but they told me i cant get they want two years tax return since i’m self employed,i have for company i worked last two years 2010 and 2011 but and loan i’m looking for its only $80000 so dont know they cant refuse


Stan December 14, 2012 at 7:37 am

same with me i will have 2 y in 2 weeks but they said no.I try with 30% down same thing and house is only 150K.


mary December 2, 2012 at 7:07 pm

What is stated income when you have a store and you get credit/debt/cash payments. Is this stated income as well?


Carl Freeman November 22, 2012 at 5:45 pm

I have a 4 plex, make the payments on time, with 7.5 percent interest, interest only and will start making principle payments also in another 3 years, and can’t refinace, because with all my rentals, I show no income.


Tim C October 8, 2013 at 12:22 am

Play their game…Get a job, get a refinanced mortgage, quit the job.


Tracy October 24, 2012 at 11:23 pm

I am self employed, having trouble with loan, can you please tell me what loan company will accept bank statements instead of tax returns. I have excellent credit. Really need help. Thank you, Tracy


norma October 16, 2012 at 3:45 pm

Hi. My husband has been self employed for at least 25yrs and 5yrs ago we built a home ourselves. We owe $140K, with equity of $220K and we never miss a payment, which is $1,200/mo. Our interest is 6 1/4 and we would like to get the new lower rates so we can still pay what we pay now but pay it off sooner. Its set on a 30yr and my husband is 51, so we need to pay it off sooner but no one will do it because we showed a loss on taxes. What makes me the most frustrated is we don’t miss our house payment so if we can make the payment now at $1200 then you know we will be able to make it when its less! Why cant they see that? One banker even said that because our house is worth so much and we owe so little, that they would love to get a hold of our house and us not make it so they can sell it for a huge profit! That’s not fair at all! Is there anything we can do to get this loan rate changed? I started paying a extra $100/mo but still not what we want to get this house paid off faster and we can’t afford to pay more! Thanks : )


Linda November 25, 2012 at 2:58 pm

One thing I can tell you my dear as soon as your house is paid off make sure the banks take their hands off of it because they will keep a lien even if it’s all paid for. See a lawyer and have the house registered to you so they can take their dirty paws off of it


Jesse October 16, 2012 at 1:24 pm

I am interested in refinancing one or both of my investment properties. Both properties have about 50% equity in them and I have an excellent credit score. I am an IT professional who decided to go in business for myself on Aug 2011 using a SCorp. I have contacted two lenders and they have both told me that I need 2 years of tax returns to prove my income and to show that it is steady. I know the current low rates will not last and I am determined to refinance my loans ASAP. What options do I have? the only two that I could think of are …
-Get a permanent job temporarily for the sake of refinancing
-Transfer the ownership of my SCorp to a family member so I have less than 25% ownership and increase my W2 salary to cover the the DTI ratio needed. This option seems like a much easier option but I am not sure if it is feasible or legal for that matter.

Any insights will be greatly appreciated


Shannon O'Brien October 17, 2012 at 11:15 am

Hi Jesse,

I don’t agree with you about the interest rates, not with QE3 underway, indefinitely.

Be that as it may, even if you were to take on a part-time job, you would need to show steady employment, and a couple of days of work isn’t considered steady, so I don’t think that would work for you.

As for your second option, I suggest you spend the money required to spend an hour with an attorney. Yours is a complicated situation and I would hate to steer you into trouble.

Thanks for the question!


Dione October 4, 2012 at 12:39 am

HI, me and my husband were trying to buy a house using wellsfrago as our lender. Everything was going well we were at closing till we found out the small bussines me and my husband ran for a year which we claimed as a loss was used towards our adjusted gross income. We both have full time jobs and our paid bi weekly. We got all the way to closing now we are trying to see if we can try to still get the loan. I did not know keeping my bussines account open and not closing my llc would hurt me. I REALLY NEED HELP I WILL NOT GET MY TWO THOUSAND DOLLARS IT TOOK TO GET TO THIS POINT.


Stephanie R October 4, 2012 at 8:43 am

Dione – We here at think it would be best if you seek the advice of a legal professional. We are not qualified to answer such a question. Thank you.


Ken September 22, 2012 at 11:23 pm

I have excellent credit, but am self-employed. My taxes don’t show enough income to be approved for a loan. What are my options? I have already found the house I want to buy and don’t want to wait until I’ve done 2 more years of taxes showing the correct amount of income. I’m in Utah. Do you know of anyone that can help?


Shannon O'Brien September 23, 2012 at 8:31 am

Hi Ken

What I’m getting here is that you have fewer than two years of self-employed tax returns? And that the return you do have shows insufficient income to qualify for a mortgage? Despite excellent credit, Ken, you need to prove you can pay for the mortgage. If your tax returns show insufficient income to pay for the loan I’m afraid you may be out of luck.

It sounds like you have a new business. I suggest waiting until you are well off the ground, or at least have two years of self-employed tax returns before applying for another loan.

I hope it all works out for you!


Phil September 24, 2012 at 4:54 pm

Shannon, I think you missed Ken’s point. He (similar to myself) have owned a business for multiple years and it is very successful. However we have very good accountants and dont show on our tax returns the income needed to buy a home. That is why we need a stated income loan. Not because we just started our business and are not finanically making a good decision.


Ken October 5, 2012 at 5:15 am

I have been self-employed for over twenty years.


Shannon O'Brien October 27, 2012 at 4:54 pm

Sorry, guys! Very few lenders, if any are giving stated income loans.

Why not ask your “very good accountants” to help by referring you to a reputable lender that gives stated loans? Wish I could help but I know of none. Maybe another reader will come along and help you out.

Thanks for the questions and sorry for the confusion!

bb January 26, 2013 at 7:09 pm

if your accountant is so good he would have let you know net income is what lenders look at.


Jonathan Nelson September 22, 2013 at 2:16 pm

Withall due respect, Sharron, your answers are absolutely worthless, and by attacking their “very good accountants” you are not helping. This is a VERY common problem and we need help! The accountant is doing what it is supposed to do and save us taxes. If we all paid more taxes we would be poorer and probably still wouldn’t have the kind of W-2 income that banks are looking for. What we all don’t understand is why is it that even though we pay our current mortgages at higher rates without fail, we cannot qualify for a new loan that would not even require as high a payment as we are currently paying…

rebecca September 22, 2012 at 5:24 am

Hello, been self employed little over a year. But also have a full time job that iv had for 8 years. I’m having trouble finding banks to consider the self employment income. I have bank statements that prove my income. Any suggestions on lenders in the lake county, Florida area thanks so much


Shannon O'Brien September 22, 2012 at 7:11 pm

Rebecca, lenders typically want to see two years of self-employed income so that may be why you’re having trouble. I am assuming you’re trying to get the self-employment income added to your other income to qualify for a larger loan.

Although he’s a bit of a hike from Lake County (Boca Raton), in the above article Tim mentions Lenny Silvestri of Alternative Mortgage Group. Give him a call, explain your problem and ask him for a referral to someone in your area. 561-395-4264.

I hope it all works out for you!


sharon September 17, 2012 at 5:17 pm

My husband and I are trying to buy a house and land. My husband gets paid cash and I don’t so we had to use just my income as proof. It turns out that the loan company only accepted me for $21,000 when we need $60,000. The only thing holding me back is my income; they said they can’t use my husband’s because he doesn’t have any proof of income. What can I do? I need help. I own a home now but we bought it contract for deed. I really don’t want to get a loan out on my current home. I live in Illinois. Please help! Thanks!


Shannon O'Brien September 18, 2012 at 12:29 am

Hi Sharon,

Sorry to hear about your trouble buying the house. Lending has become so tight since the mortgage crisis that trying to obtain a mortgage without proof of income is almost impossible.

If I were you I would shop lenders, explain your situation and see what kinds of suggestions you get. I don’t know what part of the country you’re in so I can’t suggest specific mortgage brokers that may have access to less-stringent programs. If you check around your area, though, you may find one or two.

Best of luck to you!


Tim August 29, 2012 at 9:17 am

Hi Roger,

Sorry to here about your situation but glad you brought this to light to help warn others of this tactic that banks are deploying. This has been going on for some time. Lenders will drag out the process and even sometimes incorrectly calculate income to deny loan modifications and stick borrowers with inferior terms, taking advantage of them. All borrowers need to be aware of this and should seek a second opinion before signing up for these repayment plans.

Unfortunately in your current situation you may be prevented from refinancing in the short term due to recent mortgage history and how the repayment plan is counted on your credit report.

There may be exceptions if you have an extremely low loan to value or your credit score is still intact, especially once you have caught up or have been back on track for 12 months. If you do have equity in your home approaching a mortgage broker with a wider choice of loan programs [not your bank on the high street] or looking into hard money lenders may offer some relief with a lower rate and payments.

Alternatively, it could well be worth running your case by a reputable real estate attorney in your state. It could be that the lender purposely miscalculated your income or made a mistake which could have meant you qualified. Your current situation definitely sounds like a hardship and you seem to have money coming in but your payment is clearly very high right now.

Avoid upfront fees. Ask for a free consultation and ask for evidence of real cases they have successfully completed. For those in FL Gary M. Singer in Sunrise has a great reputation. For Indiana ask around for referrals.

Hope this helps…


Roger Carlton August 28, 2012 at 4:20 pm

hi. we are currently in a repayment plan with Chase. we are self-employed in Indiana. we were at a last resort with a 12% interest rate and decided to enter the repayment plan, paying almost double the regular monthly payment to get current. we were denied a modification prior to this due to lendor’s approval of income. our credit has suffered highly due to this. any suggestions to lenders we can contact?
thank you.


Stephanie R August 28, 2012 at 4:33 pm

Good morning, Roger! I’m sorry to hear about the issues you’re having with your repayment plan. I have forwarded your question to the blog post author, Tim Houghten. He will reply to your question here, so please be sure to check back with us shortly. Thank you!


Tim August 27, 2012 at 8:25 pm

Hi Jim & Suzy,

Yes, home loans for the self-employed are becoming increasingly difficult to come by, especially Fannie Mae’s announcement last week that they will be requiring even more documentation to approve them, which individual lenders will likely overlay even tougher requirements. This is to go into effect in October.

Finding a local mortgage broker/ independent lender will offer access to the largest number of options. Depending on your state there may still be some low doc options open, though there also may be lenders who are much more lenient and willing to take on regulators on what is acceptable as ‘income verification’.

I know that Lenny of Alternative Mortgage Group in FL has been in business since way before the last boom and says he has programs which will accept bank statements as proof of income for the self-employed.

If you aren’t in FL, get referrals to reputable and established brokers.

Note: Those who are looking for loans for investing in real estate have a few more options as they are often structured as business loans and aren’t subject to the income requirements loans on personal residences require. See transactional funding or rehab lenders.

Hope this helps…


Ron Borg March 19, 2012 at 10:43 pm

Tim, for self employed people living in New York, there’s good news. If they have 35% for a down payment, good credit and can verify their assets, a low doc loan (no tax returns or other income documentation) can still be had. At my company Mortgage One, we do them all the time. I don’t know if you will allow it but I offer free advice for this program at 347-RON-BORG. That’s my direct line and I will assist anyone needing such financing personally. Interest rates are just a little bit higher than standard Fannie Mae rates but no more than 1/2% higher.


jim gordon August 26, 2012 at 1:39 am

I am self employed, having trouble with loan, can you please tell me what loan company will accept bank statements instead of tax returns. even tried my bank, have excellent credit there, mortgage dept. only uses tax returns. have contract on home, really need help fast. thank you, Jim


Stephanie R August 27, 2012 at 3:49 pm

Good morning, Jim! I have forwarded your question to the blog post author, Tim Houghten. He will reply to your question here, so please be sure to check back with us shortly. Thank you!


suzz January 11, 2012 at 1:04 am

Great article. I am self employed and not having any luck getting financing. Can you suggest a broker?


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