Self-Employed Loans · Original data · 6 min read
What 200+ Self-Employed Mortgages Taught Us
Save Financial has closed more than 200 mortgages for self-employed borrowers in California since 2009. Most were bank statement loans for contractors, restaurant owners and consultants with strong credit whose tax returns showed far less income than their businesses actually earn. Here is what those files have in common.
The numbers at a glance
| Self-employed loans closed since 2009 | 200+ |
| Bank statement loans | About 70% |
| P&L statement loans | About 20% |
| 1099 income loans | About 5% |
| Asset depletion loans | About 5% |
| Most common borrowers | Contractors, restaurant owners, consultants |
| Typical credit score | 720–780 |
| Typical down payment | 15–20% |
| Purchase vs. refinance / cash-out | 60% / 40% |
| Most common reason a bank declined them | Tax returns showed too little income |
1. Bank statement loans do most of the work
About 70% of our self-employed loans were bank statement loans. They qualify the borrower on 12 or 24 months of deposits instead of the net income on the tax return, which fits most owner-operated businesses. Another 20% used a P&L statement loan, usually for borrowers with an accountant and clean books. 1099 income loans and asset depletion loans made up about 5% each.
2. These borrowers are not credit risks
Most of our self-employed borrowers had credit scores between 720 and 780 and put 15% to 20% down. That surprises people who assume non-QM means subprime. The problem these borrowers have is almost never credit. It is documentation.
3. The real problem: tax returns understate income
The most common reason a bank turned these borrowers down before they came to us was simple: the tax returns showed too little income. Good tax planning (depreciation, vehicle and equipment write-offs, retirement contributions) lowers taxable income, and a conventional lender qualifies on what is left.
A typical case: a restaurant owner whose tax return showed about $90,000 of income qualified at about $180,000 based on business deposits. Same business, same year, twice the qualifying income. That gap is the difference between being declined and buying the home.
4. Who they are
Most of our self-employed borrowers are contractors, restaurant owners and consultants. They share the same profile: revenue that runs through a business account, real expenses, and legitimate write-offs that make the 1040 look smaller than the business really is.
5. Purchases lead, but equity matters too
About 60% of these loans were purchases and 40% were refinances or cash-outs. Self-employed owners often use equity to fund the business, consolidate debt or buy rental property, which is where cash-out refinancing and HELOCs qualified on bank statements come in.
What this means if you're self-employed
- If a bank declined you because your returns show too little income, that is the exact problem bank statement and P&L loans are built to solve.
- Strong credit (720+) and 15–20% down put you in the same position as most of the borrowers we close.
- Don't amend your tax returns or skip legitimate write-offs just to qualify. Ask a broker to run your deposits first.
For CPAs and tax professionals
If your clients run into this, we work directly with CPAs and EAs on self-employed files. See our CPA & tax professional partner program.
Frequently asked questions
What income do self-employed borrowers qualify with on a bank statement loan?
Lenders average 12 or 24 months of deposits and apply an expense factor instead of using the net income on the tax return. In a typical case at Save Financial, a restaurant owner whose return showed $90,000 qualified at about $180,000 using business deposits.
What credit score do most self-employed borrowers have?
Most of the self-employed borrowers Save Financial has closed had credit scores between 720 and 780, though bank statement programs start at 640.
How much down payment do self-employed borrowers usually put down?
Most put 15% to 20% down. Programs allow as little as 10% with strong credit.
Why do banks turn down self-employed borrowers?
The most common reason we see is that the tax returns show too little income after legitimate write-offs, even when the business earns much more.
About this data
These figures summarize the self-employed loans Save Financial, Inc. has closed since 2009 and are approximate, based on our own loan records. They describe our clients, not the whole market. Individual terms depend on credit, property, loan amount and lender guidelines. You're welcome to cite this page; please link to it as the source.
Save Financial, Inc. NMLS #377740 · DRE #01875766 · Equal Housing Opportunity. All loans subject to credit approval.