Getting a Mortgage When You’re Self-Employed: The Non-QM Route
Being your own boss has plenty of perks—flexibility, independence, and the joy of answering to no one but yourself. But when it comes to getting a mortgage, things can get a little tricky. Traditional lenders love predictable, W-2 income, and if your tax returns show more deductions than earnings, you might hit some roadblocks. That’s where Non-QM (non-qualified mortgage) loans come in—they’re designed to help self-employed borrowers like you get the financing you need.
Can You Qualify for a Mortgage While Self-Employed?
Absolutely! The idea that self-employed borrowers can’t get a mortgage is a myth. The key is finding the right loan product. While traditional lenders might give you a hard time over fluctuating income or tax deductions, Non-QM lenders take a different approach, offering options that look beyond tax returns and W-2s.
Non-QM Loan Options for Self-Employed Borrowers
Here are a few Non-QM loan options that might work for you:
Bank Statement Loans – Instead of tax returns, these loans use 12 to 24 months of bank statements to determine your income. If your tax deductions make your income look lower than it actually is, this could be a great option.
Profit and Loss Statement Loans – Some lenders allow you to provide a profit and loss (P&L) statement prepared by a CPA as proof of income, rather than tax returns.
Asset Depletion Loans – If you have significant assets but a lower reported income, lenders can calculate your income based on your assets rather than a paycheck.
DSCR (Debt-Service Coverage Ratio) Loans – If you’re buying an investment property, a DSCR loan lets you qualify based on the rental income potential of the property rather than your personal income.
Steps to Get a Mortgage When You’re Self-Employed
The process of getting approved is similar to that of a traditional borrower, but you’ll need to take a few extra steps to verify your financial stability.
1. Prove You’re Self-Employed
If you primarily earn income through 1099s or file a Schedule C on your tax return, lenders will classify you as self-employed. This also applies if you own a business, work as an independent contractor, or make most of your income from gig work.
2. Gather the Right Documents
Since you won’t be handing over a W-2, be ready to provide:
Business bank statements (typically 12-24 months’ worth)
A profit-and-loss statement (if required by the lender)
Proof of business ownership (like a business license or LLC paperwork)
Personal and business tax returns (for some Non-QM products, but not all)
3. Prepare a Solid Case for Your Business
Lenders want to see that your income is stable and likely to continue. Providing additional documentation like client contracts, a business website, or industry data can help prove that your earnings are reliable.
4. Shop Around for the Right Lender
Not all lenders offer Non-QM loans, so working with a mortgage broker or lender who specializes in self-employed borrowers is key. They’ll help you find the best program for your situation and guide you through the process.
How to Improve Your Chances of Approval
Here are a few ways to make yourself a stronger borrower:
Boost Your Credit Score – A higher score can help offset any income-related concerns.
Lower Your Debt-to-Income Ratio – Pay down outstanding debts to show you can comfortably afford a mortgage.
Make a Larger Down Payment – More money upfront can make you a less risky borrower in the eyes of lenders.
Consider a Co-Borrower – If your income alone isn’t quite enough, a co-borrower with stable income can help increase your loan approval odds.
What If You’ve Been Self-Employed for Less Than Two Years?
While most lenders prefer two years of self-employment history, there are exceptions. If you transitioned into self-employment after working in the same industry, lenders may consider your prior experience. Strong credit and significant savings can also help offset a shorter self-employment history.
Closing Thoughts on Non-QM Loans for Self-Employed Borrowers
Traditional mortgages can be a headache for self-employed borrowers, but Non-QM loans offer a flexible, common-sense alternative. Whether you rely on bank statements, assets, or rental income, there are plenty of options to make homeownership a reality—even without a W-2. The key is finding the right lender who understands your financial situation and can tailor a loan to fit your needs. So, don’t let your self-employed status hold you back from owning a home—there’s a mortgage out there for you!
Experienced Chief Operating Officer with a 26 + year demonstrated history of working in the banking industry. Skilled in all aspects of the residential mortgage market . Strong business development professional with a Bachelor of Science (BS) focused in Business Administration and Management, from St. Joseph College. A direct endorsement underwriter and a licensed Mortgage Loan Originator.
Start the Home Loan Process Today With Jet Direct Mobile
We’re committed to making the home loan application process as easy as possible. To that end, we have developed our very own mobile app, Jet Direct Mobile.
