How many years of tax returns do I need for a self-employed mortgage?

For traditional mortgages: 2 years of tax returns (personal + business). For bank statement loans: 0 tax returns needed (use bank statements instead). For FHA/VA: 2 years tax returns required. Some lenders accept 1 year if you have 2+ years in the same industry.

Self-Employed Mortgage 2026: Complete Guide (Bank Statement Loans)

Q: Can I get a mortgage if I'm self-employed?

Yes! Self-employed borrowers can get mortgages through: (1) Traditional loans with 2 years tax returns, (2) Bank statement loans using 12-24 months of deposits, (3) Asset-based loans, (4) 1099-only loans. You'll need to document income differently than W-2 employees, but many lenders specialize in self-employed borrowers.

Self-Employed Loan Options (2026)

Loan Type	Documentation	Min Down	Typical Rate	Best For
Traditional (Conventional/FHA)	2 years tax returns	3-5%	6.5%	High taxable income
Bank Statement Loan ⭐	12-24 mo statements	10-20%	7.0-7.5%	Heavy write-offs
1099-Only Loan	1-2 years 1099s	10-15%	7.0-7.5%	Contractors/freelancers
Asset-Based Loan	Asset statements	20-30%	7.5-8.5%	High net worth, low income
P&L Statement Loan	CPA-prepared P&L	10-20%	7.0-7.5%	New businesses

The Self-Employed Challenge

Here's the problem: As a self-employed person, you probably write off a lot of expenses. That's smart for taxes—but it makes your taxable income look low to lenders.

Example: You make $150,000/year but after write-offs, your tax return shows $80,000. Traditional lenders only see $80,000.

Solution: Bank statement loans look at your actual deposits, not your taxable income. They see the real $150,000.

Bank Statement Loans Explained

Bank statement loans are designed specifically for self-employed borrowers. Instead of tax returns, lenders analyze 12-24 months of bank statements to calculate your income.

🏦 How Bank Statement Income Is Calculated

Step 1: Add up all deposits over 12-24 months
Step 2: Subtract transfers between accounts
Step 3: Apply expense factor (50-90% of deposits = income)
Step 4: Divide by 12 or 24 for monthly income

Example: $300,000 in deposits over 12 months × 50% expense factor = $150,000 annual income = $12,500/month qualifying income

Documentation Required

For Traditional Loans (2 Years Tax Returns)

2 years personal tax returns (all pages, all schedules)
2 years business tax returns (if applicable)
Year-to-date profit & loss statement
Business license or CPA letter
2 months bank statements
Standard docs: ID, pay stubs (if any), asset statements

For Bank Statement Loans

12-24 months personal OR business bank statements
CPA letter or business license (2+ years in business)
2 months asset statements
Standard docs: ID, credit authorization
NO tax returns required!

DTI Calculation for Self-Employed

Lenders calculate your Debt-to-Income (DTI) ratio differently for self-employed borrowers:

📊 Self-Employed DTI Calculation

DTI = (Monthly Debts) ÷ (Qualifying Monthly Income)

Traditional loan: Uses NET income from tax returns (after write-offs)

Bank statement loan: Uses calculated income from deposits

Max DTI: 43-50% depending on loan type and lender

Best Lenders for Self-Employed (2026)

Lender	Bank Statement?	Min Down	Min Credit
Angel Oak	✅ Yes	10%	660
Citadel Servicing	✅ Yes	10%	620
New American Funding	✅ Yes	10%	680
Carrington Mortgage	✅ Yes	10%	620
Rocket Mortgage	❌ No	3%	620

Tips to Improve Your Approval Odds

Keep business and personal accounts separate — Cleaner documentation
Maintain consistent deposits — Avoid large unexplained deposits
Document large deposits — Be ready to explain any deposit over $5,000
Build reserves — 6-12 months of payments in savings
Improve your credit score — 720+ gets best rates
Consider a larger down payment — 20%+ improves approval odds
Get a CPA letter — Confirms your business is legitimate

Frequently Asked Questions

Can I get a mortgage if I'm self-employed?

Yes! Options include traditional loans with 2 years tax returns, bank statement loans using 12-24 months of deposits, 1099-only loans, and asset-based loans.

What is a bank statement loan?

A bank statement loan uses 12-24 months of bank statements to verify income instead of tax returns. Rates are 0.5-1% higher, down payment is 10-20%.

How many years of tax returns do I need?

Traditional mortgages require 2 years. Bank statement loans require 0 tax returns. Some lenders accept 1 year if you have 2+ years in the same industry.

Self-Employed Mortgage 2026: Complete Guide

📊 Self-Employed Mortgage Quick Facts (2026)