Can You Get a Mortgage If You’re Self-Employed?

Yes. In fact, many successful business owners, freelancers, independent contractors, real estate agents, consultants, and entrepreneurs qualify for mortgages every year.

The challenge is not whether self-employed borrowers can qualify. The challenge is proving income in a way that meets mortgage guidelines.

Many self-employed individuals write off legitimate business expenses to reduce taxable income. While this may help lower taxes, it can sometimes make qualifying for a traditional mortgage more difficult.

Fortunately, there are several mortgage options available for self-employed borrowers in Michigan.

Who Qualifies as Self-Employed?

Mortgage lenders generally consider you self-employed if you own 25% or more of a business.

Examples include:

• Business owners
• Independent contractors
• Freelancers
• Consultants
• Real estate agents
• Gig workers
• Sole proprietors
• S-Corporation owners
• LLC owners
• Partnership owners

If you receive a 1099 instead of a W-2, you may also be considered self-employed for mortgage qualification purposes.

Why Can It Be Harder for Self-Employed Borrowers to Qualify?

Traditional mortgage programs often rely on tax returns to determine qualifying income.

Many business owners take legitimate deductions for:

• Vehicle expenses
• Equipment purchases
• Business travel
• Home office expenses
• Employee wages
• Marketing expenses

While these deductions can reduce taxable income, they may also reduce the income a lender can use for qualification purposes.

This is why working with a knowledgeable mortgage broker can be especially important when you’re self-employed.

Mortgage Options for Self-Employed Borrowers

Traditional Conventional Financing

Some self-employed borrowers qualify using traditional tax return documentation.

Lenders typically review:

• Personal tax returns
• Business tax returns
• Profit and loss statements
• Business ownership documentation

For borrowers with strong reported income, conventional loans can offer competitive financing options.

Bank Statement Loans

One of the most popular alternatives for self-employed borrowers is a bank statement loan.

Instead of relying primarily on tax returns, lenders may review personal or business bank statements to determine qualifying income.

This option can be particularly helpful for borrowers whose tax returns do not accurately reflect their true cash flow.

DSCR Loans for Investors

For self-employed real estate investors, DSCR loans may provide another financing option.

Rather than focusing primarily on personal income, these loans evaluate whether the property’s rental income can support the mortgage payment.

What Documents Will I Need?

Documentation requirements vary by loan program.

Common documents may include:

• Bank statements
• Tax returns
• Profit and loss statements
• Business licenses
• CPA letters
• Business ownership documents
• Asset statements

An experienced lender can help determine which documentation is needed based on your specific situation.

How Much Down Payment Is Required?

Down payment requirements depend on the loan program selected.

Some borrowers may qualify for low down payment options, while others may choose larger down payments to obtain more favorable terms.

The exact amount depends on:

• Credit score
• Loan program
• Property type
• Occupancy
• Income documentation method

Can First-Time Homebuyers Be Self-Employed?

Absolutely.

Many first-time homebuyers are self-employed and successfully qualify for financing every year.

Whether you’re purchasing your first home, upgrading to a larger home, or investing in real estate, there may be financing options available.

Frequently Asked Questions

How many years do I need to be self-employed?

Many loan programs prefer at least two years of self-employment history, although exceptions may be available in certain situations.

Can I qualify using only bank statements?

Certain loan programs allow qualifying income to be calculated using bank statements rather than tax returns.

Can I get a mortgage if my tax returns show low income?

Possibly. Alternative documentation programs may provide solutions for some borrowers.

Are self-employed mortgage rates higher?

Rates vary based on the loan program, credit profile, down payment, and overall risk factors.

Can I refinance if I am self-employed?

Yes. Many self-employed borrowers refinance to lower payments, consolidate debt, or access home equity.

Work With a Michigan Mortgage Broker Who Understands Self-Employed Borrowers

Self-employed borrowers often face unique challenges during the mortgage process. Working with a lender who understands business ownership, tax returns, and alternative documentation programs can make a significant difference.

At BrightSide Lending, we help self-employed borrowers throughout Michigan explore financing options that fit their goals, income structure, and business situation.

Whether you’re purchasing your first home, refinancing, or investing in real estate, we’re here to help you evaluate your options, Contact BrightSide Lending today.