The Self-Employed Mortgage Challenge
Traditional mortgage underwriting was built for W-2 employees. If you're self-employed, you face unique obstacles:
- Tax write-offs reduce your "qualifying income" even though cash flow is strong
- 2 years of tax returns required (but your business just took off this year)
- Variable income patterns trigger red flags with automated underwriting
- Business deductions for home office, vehicle, meals reduce taxable income
- 1099 income, multiple LLCs, or partnership distributions complicate verification
The Solution: Alternative income documentation programs that evaluate your actual cash flow—not just what you reported to the IRS.
Who Benefits from These Programs?
S-Corp, C-Corp, LLC owners with complex tax strategies
1099 contractors with variable income streams
DSCR loans based on rental income, not personal income
High earners with non-traditional compensation
Less than 2 years of tax returns but strong cash flow
Self-Employed Mortgage Program Options
Multiple pathways to qualification based on your income documentation
Bank Statement Loans
Qualify using 12-24 months of business or personal bank statements instead of tax returns.
Self-employed borrowers with strong bank deposits but low reported taxable income due to write-offs
DSCR Investment Loans
Qualify based on rental income from the property—no personal income verification required.
Real estate investors acquiring rental properties without using personal income for qualification
Asset Depletion Loans
Use investment accounts, retirement funds, or liquid assets to demonstrate repayment ability.
Borrowers with significant liquid assets but limited or irregular documented income
Profit & Loss Programs
CPA-prepared P&L statements replace tax returns for recent business owners.
Recently self-employed borrowers (1-2 years) with strong current earnings but limited tax history
The Lumin Lending Self-Employed Loan Process
Simplified application designed for business owners
Income Analysis
We review your business structure and identify the optimal documentation strategy
Document Gathering
Collect bank statements, P&Ls, or asset statements based on your chosen program
Lender Matching
Submit to specialized non-QM lenders with self-employed expertise
Close in 15-21 Days
Streamlined underwriting and fast funding
Self-Employed Mortgage FAQs
Do I need 2 years of tax returns if I'm self-employed?
Not necessarily. While traditional conforming loans require 2 years of tax returns, bank statement programs, DSCR loans, and asset depletion programs do not. The right program depends on your specific situation and documentation availability.
What if my tax returns show lower income than I actually earn?
This is exactly why bank statement programs exist. We calculate your income based on actual deposits into your business or personal accounts, not your adjusted gross income on tax returns. This typically results in significantly higher qualifying income.
Can I use business bank statements or do they need to be personal?
Most bank statement programs accept either business or personal bank statements. Business accounts are common for sole proprietors, LLCs, and S-Corps. We analyze deposits and apply an expense factor (typically 25-50%) to arrive at qualifying income.
How long does it take to get approved for a self-employed mortgage?
The approval timeline varies by program complexity and documentation readiness. Bank statement loans typically take 15-21 days from application to closing, while DSCR investor loans can often close even faster. Having your documentation organized upfront helps expedite the process significantly.