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

Sometimes. Most self-employed programs prefer a two-year business history, but several bank statement and 1099 lenders will approve one year of self-employment if you spent the prior years in a related W-2 role or show strong offsetting factors like a large down payment and reserves. It is lender-specific, which is why shopping multiple lenders matters.

Do bank statement loans have much higher rates than conventional loans?

They price higher, but usually less than borrowers expect. Depending on the market, credit score, and down payment, a bank statement loan often runs roughly 1% to 2.5% above a comparable conventional loan. Putting more money down and carrying reserves narrows that gap. Many borrowers use one to buy now, then refinance into conventional pricing later.

What is the difference between a bank statement loan and a P&L-only loan?

A bank statement loan calculates income from your deposits, applying an expense factor to estimate net earnings. A P&L-only loan uses a profit-and-loss statement prepared by a CPA or licensed preparer as the primary income document, sometimes supported by a few bank statements. P&L loans help owners whose deposits are lumpy or spread across accounts.

Can I qualify for a mortgage with almost no taxable income if I have savings?

Yes, through an asset depletion loan. The lender converts a portion of your liquid assets, such as savings, brokerage, or retirement accounts, into an imputed monthly income using a set formula. This suits retirees, business owners who sold, and high-net-worth borrowers who are asset-rich but show little reportable income on tax returns.

Which self-employed loan is best for buying a rental property in California?

A DSCR loan is usually the best fit for investors. It qualifies on the property's rent relative to its full mortgage payment rather than your personal income, so heavy business write-offs do not hurt you. Expect a higher rate and roughly 20% to 25% down, with no personal income documentation required.

Loan Programs · 8 min read

The Best Mortgage Options for Self-Employed Californians

By Mike Basti·August 19, 2026

The best mortgage for a self-employed Californian depends on how you can document income, not on how much you actually earn. If you show strong taxable income, a conventional loan is cheapest; if your tax returns understate your cash flow, a bank statement loan, P&L-only loan, or 1099 loan usually wins; and investors buying rentals lean on DSCR or asset depletion instead.

Why self-employed borrowers need a different playbook

The mortgage system was built around a W-2 pay stub. When you own a business, take 1099 income, or live off distributions, the same paperwork that proves you can afford a loan often works against you. Write-offs that lower your tax bill also lower the income a lender is allowed to count.

Here is the core tension. A salaried borrower earning $150,000 shows $150,000 of qualifying income. A self-employed borrower who grosses $300,000 but writes down to $90,000 of net profit on Schedule C qualifies on the $90,000. Same lifestyle, very different loan approval.

The good news for California business owners: lenders now offer six realistic paths, and at least one of them almost always fits. The trick is matching the loan to how your money shows up on paper. As a mortgage broker, Save Financial shops these programs across dozens of wholesale lenders rather than being limited to one bank's menu.

The six loan types compared side by side

Each program answers one question differently: how do you prove you can repay? The table below lines up the realistic options so you can see, at a glance, which one matches your documentation.

Loan type	Docs it needs	Best for	Rate and down-payment posture
Conventional (Fannie/Freddie)	2 years personal and business tax returns, P&L, sometimes YTD statements	Owners whose tax returns still show strong net income	Lowest rates; as little as 3-5% down; best long-term cost
Bank statement loan	12-24 months of business or personal bank statements; no tax returns	Owners with heavy write-offs and steady deposits	Roughly 1-2.5% above conventional; typically 10-20% down
P&L-only loan	CPA- or licensed-preparer-prepared profit & loss statement, often plus a couple bank statements	Owners with clean books but complex or messy statements	Similar to or slightly above bank statement pricing; 15-20%+ down
1099 loan	1-2 years of 1099 forms, sometimes with a YTD earnings record	Independent contractors paid on 1099 with few write-offs	Comparable to bank statement loans; usually 10-20% down
DSCR loan (investors)	No personal income docs; qualifies on the property's rent vs. payment	Investors buying or refinancing rental property	Higher rate; 20-25% down; qualifies on the deal, not you
Asset depletion / asset-based	Statements for liquid assets (savings, brokerage, retirement)	Cash- or asset-rich borrowers with little reportable income	Rate varies by lender; larger down payment; income is imputed from assets

No single row is the winner. The right choice is whichever one your paperwork already supports without a fight.

Conventional, bank statement, and P&L loans in plain terms

Conventional loans remain the cheapest money available. If two years of returns show enough net income to cover the payment plus your other debts, take this path. You get the lowest rate, the smallest down payment, and no premium for being self-employed. Underwriters average your last two years of net profit and add back non-cash deductions like depreciation, so your qualifying income is often higher than the bottom line suggests.

Bank statement loans exist for the owner whose returns are technically accurate but paint an artificially poor picture. Instead of tax returns, the lender counts deposits. A common method: 12 or 24 months of business bank statements, with the lender applying an expense factor (often 50%) to estimate net income, or using a lower fixed haircut if you provide a P&L. Personal bank statement programs count nearly 100% of deposits because the money already cleared the business.

P&L-only loans go a step further. A profit-and-loss statement prepared by a CPA, EA, or licensed tax preparer becomes the primary income document, sometimes supported by a couple of bank statements to corroborate the numbers. This suits owners whose deposits are lumpy or run through multiple accounts, where raw bank statements would confuse rather than clarify.

1099, DSCR, and asset depletion for special situations

1099 loans are the cleanest option for independent contractors, real estate agents, insurance producers, and gig professionals who receive 1099s and do not write down much of their income. The lender qualifies you directly off the 1099 total, often applying a modest expense factor, so you skip both tax returns and the bank statement math. If your 1099 income is high and your deductions are low, this frequently beats a bank statement loan.

DSCR loans ignore your personal income entirely. DSCR stands for debt service coverage ratio, meaning the property's rent divided by its full mortgage payment. If a Long Beach duplex rents for more than the principal, interest, taxes, insurance, and HOA, it qualifies on its own merits. This is the workhorse loan for California real estate investors who show little personal income but own cash-flowing rentals. Expect a higher rate and 20-25% down.

Asset depletion loans, also called asset-based or asset-utilization loans, let borrowers qualify off liquid wealth rather than income. The lender takes eligible assets, applies a formula (for example, dividing a portion of the total by 60, 84, or 120 months), and treats the result as monthly income. This fits retirees, business sellers, and high-net-worth Californians who are asset-rich but income-light on paper.

How to choose: if/then rules

Match your situation to the rule below, then confirm with a broker who can price all six across multiple lenders.

If your last two tax returns show enough net income to cover the payment, then choose a conventional loan. It is almost always the cheapest, and being self-employed does not raise your rate.
If your business deposits are strong but your returns are gutted by write-offs, then choose a bank statement loan. Twelve to 24 months of deposits tell the real story.
If your bank statements are messy or spread across accounts but your CPA can vouch for the numbers, then choose a P&L-only loan.
If you are a contractor paid on 1099 with few deductions, then choose a 1099 loan. It is the shortest path to qualifying income.
If you are buying or refinancing a rental that cash-flows, then choose a DSCR loan and keep your personal returns out of it.
If you have large savings, brokerage, or retirement balances but little reportable income, then choose an asset depletion loan.

Two more practical notes. First, you can often refinance later: many owners use a bank statement loan to buy now, then refinance into a conventional loan once two clean years of returns catch up. Second, down payment size moves your rate on every non-conventional program, so putting 20% or more down usually buys a materially better price.

What to prepare before you apply

Speed and pricing both improve when your file is ready on day one. Gather the following before a single application goes out:

Two years of personal and business tax returns, even if you expect to use a no-tax-return program, so the broker can compare paths.
Twelve to 24 months of bank statements for the account where business income lands.
A year-to-date profit-and-loss statement, ideally prepared or reviewed by your CPA or EA.
Your most recent 1099s if you are a contractor.
Statements for any assets you might use to qualify or as reserves.
Proof your business has existed for at least two years (most self-employed programs want a two-year history; some allow one year with an offsetting factor).

Because Save Financial is a broker, one document set gets shopped to many lenders at once. That matters most for self-employed borrowers, where two lenders can calculate your income differently on the exact same statements and arrive at approvals thousands of dollars apart in buying power.

The bottom line

There is no single best mortgage for self-employed Californians. There is a best mortgage for how your income shows up on paper. Strong tax returns point to a conventional loan and the lowest rate. Heavy write-offs point to a bank statement, P&L, or 1099 loan. Rental investors use DSCR. Asset-rich borrowers use asset depletion.

The mistake to avoid is assuming a bank's rejection means you cannot qualify. It usually means that bank offered only one program. A broker who can price all six is often the difference between a denial and a closing. If you own a business in California and want to know which path fits your numbers, Save Financial (NMLS #377740, DRE #01875766) can run your file across every one of these programs from its Newport Beach and Marina del Rey offices.

About this article: Save Financial is a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766) with offices in Newport Beach and Marina del Rey, serving all 58 counties. We shop multiple lenders to match you with the right program. For a real quote, apply online or call 949-379-5320.