Self-employed, no W-2? There are still ways to buy a home
Nail salon and restaurant owners, drivers, contractors, anyone paid on a 1099: your tax return often shows less than what reaches your bank account, because business expenses are deducted. Some programs qualify you on bank statements instead.
NMLS 2797128 5.0/5 from 21,774 Google reviews of Loan Factory
What a standard loan looks at, and what this one looks at
| Standard loan | Bank statement loan | |
|---|---|---|
| Income comes from | 2 years of tax returns | 12 or 24 months of bank statements |
| Based on | Income after deductions | Monthly deposits |
| Interest rate | Lower | Usually higher |
| Down payment | Can be low | Usually more |
I compare both for your file. If your tax returns support a standard loan, you’ll get a better rate.
Based on your monthly deposits, how much home can you afford?
Illustration only. Not a quote or a commitment to lend.
Programs for self-employed borrowers
Bank statement loan
Uses your personal or business bank statements to calculate income.
1099 loan
For contract workers paid on a 1099 instead of a W-2: drivers, tradespeople, salon workers.
Asset-based loan
Uses your savings, investments or retirement accounts to show you can repay.
Bank statement loans: what you gain, what you give up
A good fit when
- Your tax returns show low income because of write-offs, but deposits come in steadily
- You want to buy this year rather than wait for another tax season
- You have a down payment and reserves above the bare minimum
Not yet when
- Two years of tax returns already qualify you for a conventional loan, with a lower rate and lower costs
- Deposits swing month to month, or most of your revenue stays in cash
- You can wait a year and file returns that reflect your real income
For business accounts, lenders usually count only part of your deposits and treat the rest as business expenses. Every write-off also lowers the income a lender can use. If you plan to buy in the next year or two, talk to your CPA and to me before you file: the tax you save can be smaller than the extra interest you would pay.
Documents to gather
- 12 or 24 months of bank statements
- Business license or a letter from your CPA
- A current ID or driver’s license
- Savings and investment statements (if you have them)
Does cash I haven’t deposited count?
Only money deposited into an account counts. If you keep a lot of cash, start depositing it regularly now: after 12 months your statements show what the business really takes in. Send me where things stand and I’ll work out how long you need and which program fits.
What if my business is just over a year old?
Most programs need 2 years of self-employment. Some accept less if you worked in the same field before. Send me your details and I’ll check.
What if I use an ITIN?
Some lenders have programs for ITIN borrowers. Requirements vary by lender, and I’ll check them for you.
What clients say about Loan Factory
I used Dustin for a jumbo loan. Being self-employed and getting large loans can make things complex, but Dustin diligently navigated the process! He’s great!!
It had been a while since we went through loan process. Thuan and his team did a great job from start to finish. Had a few bumps along the way with todays lending requirements, self employed and our home state of California in particular. Closed escrow last week and moving in! Highly recommend Loan Factory.
This isn't the first time I have closed with this team. I am always pleased with the ease of the loan process. I am a business owner with a complicated set of businesses and returns. …
Google reviews of Loan Factory, the company I work with: 21,774 reviews, 5.0 average.
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Loan Factory figures, from loanfactory.com.