Self-Employed Loans · 7 min read
Can I Get a Mortgage If I'm Self-Employed and My Tax Returns Show Low Income?
Yes. If your tax returns show low income because of heavy write-offs, you can still qualify for a mortgage. A bank statement loan uses your actual deposits instead of your tax returns. Below is a real deal I closed for a business owner the bank turned down.
The short answer: yes
If you own a business, you already know how this goes. Your CPA does a good job, you write off everything you legally can, and your tax bill goes down. Then you try to buy a house, and the bank looks at that same tax return and tells you that you don't make enough money.
You can still get a mortgage. I've been a mortgage broker since 2009, and I've closed roughly 200 loans for self-employed borrowers. That number has climbed fast in the last few years as bank statement loans went mainstream.
Below I'll walk you through a real deal I closed for a client the bank turned down, how these loans actually work, what they cost, and the mistakes I see people make before they ever pick up the phone.
Why the bank said no
A traditional loan qualifies you on the net income from your tax returns, usually averaged over the last two years. Every write-off that saved you money in April counts against you when you apply.
That isn't a judgment on you or your business. The bank has one box, and full-doc tax returns are the only thing that fits in it. If your returns don't fit, the answer is no, even when your account balances clearly show you can afford the payment.
A real example: the wholesaler the bank turned down
One of my clients owns a wholesale company that sells to some of the biggest discount retail chains in the country. His business was bringing in about $200,000 a month in deposits. After all the expenses and write-offs, though, his company tax returns didn't show much income at all.
He went to his local bank first, and they turned him down based on his tax returns.
When he called me, we skipped the tax returns completely and used a 12-month business bank statement loan. Here's how the numbers worked:
| Average monthly deposits | about $200,000 |
| Expense factor applied | 50% |
| Qualifying monthly income | about $100,000 |
| Purchase price | $1.6 million |
| Down payment | 20% ($320,000) |
| Loan amount | $1.28 million |
| Credit score | 765 |
| Points paid | None |
The part that surprised him was the rate. We got him a rate just as good as he would have gotten with full tax-return documentation, with no points.
Three things made that happen: a strong credit score, big and consistent deposits, and timing. When we locked, pressure on the 10-year Treasury and high inflation had pushed conforming rates up, and non-QM pricing was right in line with them.
I want to be straight with you. That won't always be the case. Bank statement loan rates usually run higher than a conventional loan. But the gap isn't always as big as people assume, and when you lock matters a lot.
How a bank statement loan works
Instead of your tax returns, the lender looks at what actually lands in your bank account. You give them 12 or 24 months of statements, they total the eligible deposits, and that becomes your income.
- Business accounts: the lender applies an expense factor to account for your business costs. 50% is the common default. With a CPA letter or a CPA-prepared P&L showing your real expense ratio, it can often come down to somewhere around 20% to 35%.
- Personal accounts: most lenders count 100% of eligible deposits with no expense factor. Transfers between your own accounts and non-business deposits get backed out. More on that in business vs. personal bank statement loans.
These are non-QM loans, which means they aren't sold to Fannie Mae or Freddie Mac. Each lender sets its own rules, and that's exactly why it pays to have someone who knows which lender fits your file.
Typical requirements
Every lender is different, but here's what I see most often:
| Requirement | Typical range |
|---|---|
| Credit score | 620 to 660 minimum; best pricing at 720+ |
| Down payment | 10% minimum at some lenders; 15% to 20% is more common |
| Time self-employed | 2 years standard; some lenders take 1 year if you worked in the same field before (details) |
| Statements | 12 or 24 months, all pages |
| Expense factor (business accounts) | 50% default; lower with a CPA letter or P&L |
Bank statements aren't the only option
When a self-employed client calls me, I look at the whole picture before picking a program. Here's how I match people:
| Program | What qualifies you | When I use it |
|---|---|---|
| Full-doc conventional | Tax returns, with depreciation and other non-cash write-offs added back | I always check this first. If it works, it's still the cheapest money. |
| 12- or 24-month bank statement | Your deposits, minus an expense factor | Business owners who write off a lot and whose deposits tell the real story. My go-to for most self-employed borrowers. |
| P&L only | A profit and loss statement signed by your CPA | Your bank statements are messy or split across several accounts. |
| 1099 | Your gross 1099 income, minus a flat expense factor | Contractors and commission earners. No tax returns needed. |
| Asset depletion | Your savings and investments, turned into monthly income | You have large assets but uneven income. |
| DSCR | The property's rent | Investors buying rentals. Your personal income isn't even used. |
Three mistakes that hurt your approval
Most of the problems I fix happened before the client ever called me.
- Letting everyone pull your credit. People shop around, and three or four lenders run their credit. Every inquiry shows up on your report, and underwriters ask about each one. Work with one broker who can shop many lenders for you, so you're not collecting inquiries.
- Mixing business and personal money. When business deposits and personal deposits run through the same account, or money bounces back and forth between accounts, the lender can't tell what's real income. Transfers get backed out, and your qualifying income drops. Keep one clean business account.
- Going to your bank first. Your bank has one program, and it's built on tax returns. A no from them doesn't mean no. It means you asked someone who only has one door.
What happens when you call me
The first thing almost every self-employed client asks me is, "My bank said no. Can I even buy a house?"
The first thing I tell them is to stop. Don't let anyone else pull your credit. Let's figure out which program fits you before we apply anywhere.
Then I ask three questions:
- How long have you been in business?
- Where do your deposits go: a business account, a personal account, or both?
- Roughly what comes in each month?
With those answers, I usually know within about 10 minutes whether you're a full-doc, bank statement, or P&L borrower, and what you can realistically afford. If your bank said no, there's a good chance I've already closed a loan for someone in your exact situation.
Quick answers to common questions
Do I need tax returns for a bank statement loan?
No. The lender qualifies you on your bank deposits instead of your tax returns.
Are bank statement loan rates higher?
Usually, yes. But with strong credit, a solid down payment, and good timing, the difference can be small. One of my wholesaler clients got full-doc pricing with no points.
Can I qualify after only one year of self-employment?
Some lenders allow it, especially if you worked in the same field before going out on your own. Two years is more common.
Can I refinance into a conventional loan later?
Yes. Once your tax returns show enough income, you can refinance into a conventional loan if the rate makes sense.
Does it matter whether I use business or personal bank statements?
Yes. Personal statements usually count your full eligible deposits. Business statements get an expense factor applied. I'll tell you which one gets you the higher qualifying income.
Talk to someone who does this every week
If your bank said no, or you're worried your tax returns won't hold up, call or text me at (949) 379-5320, or reach me through our contact page. I'll tell you honestly which program fits you, what you can afford, and what it will cost, before anyone pulls your credit.
Mike
About the author: Mohammad "Mike" Basti is a California-licensed mortgage professional at Save Financial. Save Financial is licensed in all 58 California counties (NMLS #377740, DRE #01875766). For a personalized rate quote based on your situation, apply online or call 949-379-5320.
Disclaimer: This article reflects market conditions as of October 16, 2026 and is general guidance, not personalized financial advice. The client example is real; identifying details have been left out. Rates, programs, and requirements vary by lender and change often. All loans are subject to credit approval. This is not a commitment to lend. Save Financial, Inc. NMLS #377740, CA DRE #01875766.