Self-employed and buying a home in DFW? Here's how it works.
You run your own thing. Maybe it's a roofing crew, a salon suite, a dental practice, or a laptop and a stack of 1099s. Getting a mortgage works a little differently for you. Usually it isn't a dealbreaker. It's mostly a question of which paperwork tells your story best.
I always start with a soft pull, so no hard credit ding.
The short answer
Most self-employed buyers qualify one of two ways. The regular way uses your last two years of tax returns, and the lender counts what's left after expenses, with some write-offs like depreciation added back. If your returns undersell what you really make, a bank statement loan can use your deposits instead. It usually costs more, so it's the backup plan, not the first stop. Either way, I'll look at your numbers and tell you which road fits.
Who counts as self-employed
For a mortgage, it's not just people with a business card. Under Fannie Mae's rules and FHA's, you're self-employed if you own 25% or more of a business. That covers:
Sole proprietors and single-member LLCs
Partners, and S corp or C corp owners at 25% or more
1099 contractors: real estate agents, consultants, rideshare and delivery drivers, trades
Doctors, dentists, and other professionals who own their practice
Two roads to a loan
Road 1: your tax returns
This is how conventional, FHA, VA, and most jumbo loans work. The lender reads your personal returns, and often your business returns too.
Two years of history is the usual starting point.
Less can work if you did the same kind of work before you went out on your own.
The lender uses income after expenses, then adds back some paper write-offs like depreciation.
Steady or rising income is easier. A down year gets questions.
1099-only: your 1099 forms instead of your Schedule C.
P&L-only: a profit and loss statement prepared by a CPA or tax preparer.
Asset depletion: savings and investments turned into qualifying income.
More flexible, usually more expensive. Worth it for some people, not for others. I'll show you the tradeoff before you pick.
When your deal doesn't fit the box
Self-employed files are rarely tidy. That's normal. Here's what I see a lot, and how it usually goes:
You just went out on your ownIf you did the same work as an employee before, the agency rules can still count it. If not, we may be looking at timing.
Your write-offs did their jobGreat for taxes, rough for a mortgage. Bank statements or 1099s may show more of what you earn.
One year was slowTell me why. A one-time reason with an explanation reads very differently from a steady slide.
More than one business, or K-1sEach business gets looked at on its own, and K-1 income has to be money you actually took or could take. We sort it out one at a time.
Your down payment is in the business accountIt can often be used. The lender will want to see that taking it won't hurt the business.
If none of the roads fit today, I'll tell you that straight, and what would make it work later. Sometimes it's one more tax return. Sometimes it's a CPA conversation before you file.
What to send me
Start with what you have. I'll tell you if anything else is needed.
Your last two years of personal tax returns, all pages and schedules
Business tax returns if you have a partnership, S corp, or C corp
Your 1099s, if that's how you get paid
Two recent months of bank statements, personal and business
A quick note on what the business does and how long you've been at it
Where you want to buy and roughly the price
If you're buying in the next year or two
File your returns on time, and sign them.
Keep business and personal money in separate accounts.
Talk to your CPA about how this year's write-offs will look to a lender. I'm not a tax advisor, and this isn't tax advice.
Big deposits that aren't regular income need a paper trail. Keep it.
Send me your returns early. I can tell you pretty quickly what a lender will see.
Ready when you are.
Send the short form or call. Tell me what you do, how long you've been doing it, and where you want to buy. I'll tell you which road fits, or what to line up first. My office is in Fort Worth, and I help buyers all over DFW.
I always start with a soft pull, so no hard credit ding.
Self-employed mortgage questions
Can I get a mortgage if I am self-employed?
Yes. Lots of self-employed people buy homes. The difference is the paperwork. A W-2 employee shows pay stubs. You usually show tax returns, or on some loans, bank statements. Same goal, different proof.
Do I count as self-employed if I only own part of a business?
If you own 25% or more of it, yes. Fannie Mae and FHA both draw the line at 25%. Under that, your income is usually treated like a regular paycheck.
How long do I need to be self-employed?
Two years is the usual starting point. Less can work. Fannie Mae can count it if your latest tax returns show a full 12 months from the business and you earned the same or more doing similar work before. FHA can count one to two years if you spent at least two years in the same or a related line of work first.
My tax returns show a lot less than I make. What now?
That's the most common one I hear. Good write-offs lower your taxes and also lower the income a lender can use from your returns. A bank statement loan looks at your deposits instead. It usually costs more than a conventional loan, so I check the tax-return route first and show you both.
I get paid on 1099s. Is that self-employed?
For a mortgage, usually yes. On a regular loan, the lender looks at what's left on your Schedule C after expenses. There are also loans that use the 1099 forms themselves, so your deductions don't shrink your income.
My income went down last year. Does that kill it?
Not by itself. Lenders look at the trend, and a drop gets a closer look. Under FHA rules, a drop of more than 20% needs extra review. If you know why it dipped, tell me early. A one-time reason with a clear explanation is a different story from a steady slide.
Can I use money from my business account for the down payment?
Sometimes. Under Fannie Mae's rules, the lender checks that pulling the money out won't hurt the business. That can mean a few months of business statements or a balance sheet.
What if I don't fit any of this?
Then tell me the deal anyway. New business, two businesses, a K-1 that doesn't match what you took home, a big year after a slow one. Some files take a different loan, some take better timing. I'll tell you which, and what to do next.
