Quick answer
Yes. Lenders usually start with two years of signed tax returns and qualify you on the income that remains after your write-offs. If your returns don’t show enough, a bank statement loan may use 12 or 24 months of deposits instead, typically with more money down. With less than two years in business, some loans can still work if you have a full year on your tax return and a related work history.
Rules on this page were checked on against the Fannie Mae Selling Guide and Valor Mortgage’s bank statement loan page. Program terms are subject to agency and lender guidelines and may change, and individual lenders can set stricter rules.
How self-employed borrowers get pre-approved
Transcript: So how can self-employed borrowers get pre-approved? There's two different things that we're going to look at. One, we're going to look at your tax returns and determine whether or not you've written off all of your income. If you have and that route doesn't work, then we're going to look at a product called bank statement loans. In bank statement loans, we're going to look at the average income for the 12 months or 24 months of your bank statements and use that amount to qualify you to purchase. So if you're looking to purchase and you're self-employed, then reach out to us so that you can buy with confidence and buy with Valor. Thank you.
Bank statement loans are non-QM programs. Rates, down payment, credit and reserve requirements are set by each investor and vary.
Which path fits your income?
| Tax return loan | Bank statement loan | |
|---|---|---|
| How income is figured | From your tax returns, after write-offs | From 12 or 24 months of deposits, often reduced by an expense factor |
| Typical programs | Conventional, FHA, VA, USDA | Non-QM, set by each investor |
| Typical down payment | Depends on the program | Typically 10%–20% on a primary home |
| Best fit | Your returns show enough income | You write off much of your income, but deposits are strong |
Program terms and eligibility are subject to agency, investor and lender guidelines and may change. Bank statement figures are typical ranges, and rates and requirements vary.
Why do write-offs matter?
Because a lender generally starts from the income you reported to the IRS. As Christopher explains in the video, the first question is whether you have written off all of your income. Deductions lower your tax bill, but they can also lower the income used to qualify. A lender analyzes your returns to determine what counts, using Fannie Mae’s Form 1084 or a similar cash flow analysis on conventional loans.
If you may buy in the next couple of years, talk to your tax preparer and a loan officer before filing. Your tax decisions are yours to make, but it helps to see the effect on your mortgage first.
Can you qualify with less than two years in business?
Sometimes. Fannie Mae generally requires a two-year history of prior earnings. It may consider less if your most recent signed tax returns show a full 12 months of self-employment income from the current business, and you have documented prior income at the same level or higher in the same field or a similar role.
Some bank statement lenders also accept one to two years with extra reserves and two years in the same line of work. If you just left a job to start a business, see how changing jobs affects your application.
What other options are there?
- 1099 income. A related program may use one or two years of 1099s plus year-to-date proof, with an expense factor. See the bank statement loan page.
- Asset depletion. On WSGI’s One Street Over, Christopher describes using a large sum of savings and retirement funds to help qualify, as well as self-employed scenarios. Hear it from 14:58 in the episode.
- Rental property income. If you are buying an investment property, a DSCR loan looks at the property’s rent rather than your personal income.
Non-QM programs have their own rates, down payment, credit and reserve requirements, set by each investor.
What should you gather first?
- Your last two years of signed personal federal tax returns, with all schedules
- Business returns, if your lender requires them
- Recent personal and business bank statements
- A year-to-date view of your business income, if requested
Self-employed mortgage FAQ
How many years do you need to be self-employed to get a mortgage?
Usually two, but not always. Fannie Mae generally requires a two-year history. It may accept less with a full year on your tax return and documented prior income in the same field. Lenders can set stricter rules.
Can you get a mortgage if you write off most of your income?
Possibly. If your tax returns don’t show enough income, a bank statement loan may average your deposits over 12 or 24 months instead. These non-QM loans typically need more money down, and their terms vary by investor.
Can 1099 contractors get a mortgage?
Yes, often. Lenders generally treat 1099 income as self-employment income and look at your tax returns. Some non-QM programs use one or two years of 1099s plus year-to-date proof, with an expense factor.
Does being self-employed mean a worse loan?
Not by itself. On a tax return loan, the same program rules generally apply once your income is documented. Non-QM programs are priced and structured differently, so compare them with any standard option you may qualify for.
Where these rules come from
| Rule or figure | Source | As of |
|---|---|---|
| Two-year history, 12-month exception, tax returns, Form 1084 | Fannie Mae Selling Guide B3-3.5-01 | Nov 5, 2026 |
| Bank statement and 1099 program ranges | Valor Mortgage bank statement loan page | Public 2026 investor guides |
Related answers and guides
- Self-employed bank statement loans in Tennessee, the full guide.
- Non-QM loans and profit and loss statement loans.
- What’s the difference between prequalification and preapproval?
- Do you need two years of work history?
- More answers for self-employed borrowers.
- About Christopher Armantrout.
Call me at (615) 671-9178. That’s the fastest way to get a straight answer on what you’d qualify for and how your self-employment income could be counted.
If it’s after hours, grab a time on my calendar. Pick a slot that works and I’ll call you then.
If your life is too chaotic for a phone call right now — I understand — start an application and I’ll review it and reach out with a plan.
Valor Mortgage, LLC · Christopher Armantrout, Mortgage Loan Originator, NMLS #1210804 · Valor Mortgage, LLC is powered by Encore Lending Group, LLC, NMLS #1249911 · Licensed in Tennessee · Equal Housing Opportunity
724 S Main St, Springfield, TN 37172 · (615) 671-9178 · christopher@valor.mortgage · NMLS Consumer Access
The dollar figures on this page are illustrative examples for general information only and are not an offer, a rate quote, or a commitment to lend. Actual interest rates and APRs vary based on loan program, borrower qualifications, property, market conditions and other factors. Program fees, limits and terms are set by the agencies named above and change without notice; all loans are subject to credit approval, income verification and property appraisal. Not all applicants will qualify.